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 Text | Xuanyunjun First release | Speak slowly 01 A friend of mine quit his job to speculate in Bitcoin. He made a lot of money through digital currencies (Bitcoin, Ethereum, etc.). Now he has withdrawn all his principal and relies entirely on profits.  When he suggested that I pay attention to Bitcoin, Bitcoin was at a high of US$19,000. Two days later, Bitcoin fell to US$11,000, a drop of more than 40%. Then "Holocaust!" began to circulate on the Internet. International speculators bloodbath retail investors! The bloody scene from 400 years ago is repeated! Rivers of blood! "Articles like this.
The author of the article believes that Bitcoin is a game of drumming and passing flowers, and another "Tulip Bubble" financial scam.  Let’s first explain the “Tulip Bubble”, which is a real event that happened in the Netherlands. Tulips are native to Asia Minor and were introduced to the Netherlands in 1593. In the early 17th century, tulips were sought after by the upper class of Europe. However, because they had only been introduced to Europe for a short time, the number was very limited, so the price of tulips was also very expensive. Some sensitive speculators seized the business opportunity and began to hoard tulip bulbs in anticipation of price increases. Soon, under the encouragement of public opinion, the Netherlands launched a craze for buying tulips. At that time, a tulip root originally worth 1,000 yuan was valued at 20,000 yuan in less than a month. Faced with such huge profits, the Dutch, who were dazzled by the profits, began to sell off their belongings and rush to buy tulips. A kind of tulip called "Forever Augustus" was even sold for enough to buy a mansion on the canal in Amsterdam. According to greater fool theory:
In order to facilitate trading, the Dutch also opened a fixed tulip trading market in the Amsterdam Stock Exchange. At this point in the story, it sounds like it has a lot in common with Bitcoin. But the second half of the story is completely tragic. As speculators suddenly sold tulips in large quantities, the public panicked and tulip prices avalanched. When the bubble burst, ordinary tulip varieties were worth less than an onion, and millions of people lost their money. This is the earliest well-documented case of bubble economy in human history. So, will Bitcoin be like tulips? To understand this problem, we must first understand the characteristics of Bitcoin and the logic of its price rise and fall.  02 As for what Bitcoin is, it’s very complicated to explain. Simply put:
Every Bitcoin has a private key and a public key that match each other. The private key is a specific number. You can think of it as the serial number on the RMB. Each Bitcoin has a fixed serial number (private key). The public key can change, and its role is to determine who the owner of the Bitcoin is. For example, if you give your Bitcoin transaction to someone else, your public key will be invalidated. Then the algorithm will generate a new public key for the other party. The new public key will be rematched with the serial number (private key) of the Bitcoin. At the same time, all Bitcoin players will immediately know that this Bitcoin has been traded (because all computers running the Bitcoin algorithm on the Internet participate in the rematch calculation, which is a characteristic of blockchain technology). As for who the specific transaction was given to, the algorithm will not consider this issue. The algorithm only recognizes the key. It is precisely for this reason that Bitcoin has the following three main characteristics: 1. There is no place of issuance, no national or bank guarantee, it only follows algorithmic rules. This means that no one will endorse Bitcoin, but no country or organization can easily control it. It is decentralized. 2. Global circulation, convenient transactions, and strong confidentiality. Any computer connected to the Internet can conduct Bitcoin transactions, and Bitcoin transactions only recognize keys and do not need to verify the identity of the trader. This means that the transaction process can bypass supervision and is extremely confidential (this is a very important reason for the rise of Bitcoin, which will be discussed in detail later). 3. The total circulation is limited. According to the Bitcoin algorithm, the total number of Bitcoins is capped at 21 million, and its issuance method is halved every four years. This means that as time goes by, fewer and fewer Bitcoins will flow into the market, and it is expected that no new Bitcoins will be generated starting in 2140. Knowing this characteristic, you will find that there is an essential difference between Bitcoin and tulips. As a plant, tulips can be cultivated on a large scale, so as the supply of tulips on the market increases, price declines are inevitable. However, speculators' breakthrough selling instantly burst the bubble, leading to a financial disaster. The supply of Bitcoin is getting less and less, which creates very good conditions for hoarding. But the premise of hoarding Bitcoin and other appreciation is that the Bitcoin must be valuable, otherwise it will be useless no matter how much you hoard. Bitcoin was created as a digital currency, and whether it can become a universal currency determines the value of Bitcoin.  03 In the early economic activities of mankind, shells were once used as currency. For example, when Zheng He sailed to the West, Gong Zhen, who accompanied him, recorded in his book "Historical Records of Western Countries" that the commercial trade of the Laoshan Kingdom (now the Maldives) was conducted in silver coins, but it also supplied shells to Siam (ancient Thailand) and Bangladesh as their currency.  Cigarettes were also used as currency in Nazi concentration camps and in post-World War II Germany. The essence of currency is a contract about the right of exchange. As long as enough people agree that something can be used as currency in transactions, it can become a currency, even without the endorsement of national credit and bank collateral. The essence of currency is a "trust game".  Back to Bitcoin, it must be applied to real-world transaction scenarios before it can truly become a currency. So what are the main application scenarios of Bitcoin now?
I wrote about a case in the article "Dark Web, Sex Slaves, Pedophilia: Others Are Hell": A 20-year-old British model was deceived into Milan, Italy, where she was kidnapped and auctioned on the dark web with a starting price of 300,000 euros in Bitcoin. According to the terms of the auction, the girl can be sold to any place in the world as long as someone pays, and there is no "shipping fee" within Europe.”……  Beyond the civilized world known to ordinary people, there is a dark world filled with drugs, arms and even slave trade (for details, you can review my other article "The Unfinished Words in the Disappearance of Zhang Yingying: There is a Group of Devils Wandering in the World"). They communicate through the dark web and hide from the civilized world.  (The police found a brochure of the Black Death Group on the suspect in the British model kidnapping case. Their group's logo is a group of people wearing crow masks) Bitcoin's global circulation, anonymous transactions, and strong confidentiality make it very convenient for them to carry out smuggling and illegal transactions. Illegal transactions are one of the main application scenarios of Bitcoin in the real world. Another use of Bitcoin is to facilitate free exchange and transfer of assets overseas in countries with foreign exchange controls. As of today, the size of these two markets determines the value of Bitcoin.  04 Is it possible for Bitcoin to become a global currency in the future? My personal opinion is that it is impossible for two reasons:
Since the issuance method of Bitcoin is halved every four years, this means that those who entered the market in the first batch have easily obtained a large amount of Bitcoins, while those who entered the market later can only obtain a small amount of Bitcoins no matter how much they invest, and the later they enter, the more half the effort will be achieved. Today, most Bitcoins are in the hands of a very small number of people (such as Satoshi Nakamoto, the mysterious inventor of Bitcoin). This is one of the reasons why Bitcoin is difficult to become a popular currency. More importantly, currency cannot be decoupled from politics. Luo Jisiwei has a program called "Money and Politics". Luo Zhenyu used the Bank of England and the Bank of Scotland as examples to deduce the relationship between currency and politics:
This is why the government completely shut down Bitcoin trading in September this year and defined token issuance financing (ICO) as “an act of illegal public financing without approval, suspected of illegal sales of token tickets, illegal issuance of securities, illegal fund-raising, financial fraud, pyramid schemes and other illegal and criminal activities. ” Even if China wants to promote digital currency in the future, it must issue an official digital currency in the name of the country (there is news that the country is already developing its own digital currency, but the authenticity is unknown).  05 Does Bitcoin still have investment value? Opinions from all sides are polarized. For example, John McAfee, the famous American hacker and founder of the anti-virus software McAfee, once declared that he would "guarantee with his personality" that by the end of 2020, the price of Bitcoin will reach $1 million.  Buffett believes that Bitcoin is a joke. Buffett said that the rise of Bitcoin now excites many people, but virtual currency is a real bubble, and any idea that virtual currency has value is wrong.  My view on Bitcoin is that the value of Bitcoin only depends on the scale of its application scenarios in the real world. This is a fundamental logic for my judgment of Bitcoin. According to my previous inference, Bitcoin cannot become a currency in global circulation, but it will become a tool used by a small group of people for transactions, because the essence of currency is a "trust game." In the dark web, black market, underground banks, arms smuggling and other fields, the anonymous transaction characteristics of Bitcoin can facilitate them to complete various illegal transactions. As long as everyone in this circle accepts Bitcoin, then it is a currency. At this point, I can give my conclusion:
As for other digital currencies, only Ethereum is valuable, because the virtual currency adopts the Ethereum protocol when financing and uses Ethereum for settlement. And those digital currencies that cannot find practical uses are most likely tools used to make money.  06 The above is my fact-level judgment on Bitcoin. Finally, I will say a few words about the value-level judgment. Although technology itself is innocent, if a technology is reduced to a tool for speculation, money laundering, drug trafficking, arms smuggling or even the auction of sex slaves, it must not be worthy of praise!  Krugman once said:
A small group of smart people in this world have been pursuing freedom from regulation. Bitcoin is also a product of this concept, but absolute freedom may not be as beautiful as we imagine. Because absolute freedom will also make the devil in human nature lose its restraints. Teacher Wu Bofan once said: In the world shrouded by the dark web, we are actually blind people who don’t know how blind we are. We only stumble upon the tip of the iceberg of this dark world. The education we have received since childhood, our textbooks, and the information we receive on the Internet are like an incomplete map, with only one civilized world marked on it. But beyond the civilized world, there is a dark forest where a group of demons roam. The devil in the real world is actually the darkness in human nature. The real hell on earth actually comes from the human heart.  Xuanyunjun: A male majoring in engineering in a 985 university, a contracted author of Times Chinese books. There are some stories and some opinions ； With a little rationality and a little warmth, the new book "I Like You Like This" is now on the shelves. Public account: Huanhuanshuo520  |
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