Source: Qieqieqie

Is Bitcoin still reaching the $100,000 threshold?

Bitcoin as a String code, what value does it have to reach today’s heights? What is its underlying logic? Why is it called “digital gold”? Does it have anything to do with currency? Let’s start with currency.

A currency of one hundred thousand US dollars is equivalent to more than 700,000 RMB. One hundred thousand dollars is a symbolic node, just like when it broke ten thousand and fifty thousand. It may hover around this point or even fall back, and then continue to surge upward. Of course one day it may be worthless.

Whether it is worth it is not only about technical maintenance, but more importantly, people’s evaluation of it. If one person thinks it is valuable, it will be valuable to that person; if a group of people think it is valuable, it can be circulated among this group of people; when everyone recognizes its value, it can be circulated among everyone. .

So the debate about whether Bitcoin is currency is meaningless. Now in some places on the earth, it is already currency, and some people are already using it for transactions, which is the kind of daily life transactions. It circulates among this group of people, and it is currency. Some places are temporarily unable to use it as a medium of exchange in daily life. It is not a currency, but an investment at most.

Whether it is currency, investment products, capital goods, or consumer goods, anything of value has its value given by people. Currency is special among them, and it does play a very important role.

My previous article said that people must have valuable craftsmanship, and then I thought of a sentence in "The Future of Money", "If the currency held by others is harder than yours, you simply cannot stay out of it." . The currency in your hand must also be valuable.

"Hard" currency means that money is valuable enough. What money means is that its purchasing power is very strong, and its purchasing power can be maintained or even increased in the future. The main job of money is as a medium of exchange. People use money to buy things, so of course what determines its value is purchasing power.

So in addition to valuable craftsmanship, it is best to have valuable assets to anchor your wealth, otherwise you will wait to be robbed by inflation. This does not constitute a recommendation for action, just a statement of fact. Even if you have skills and can make money, under the dilution of inflation, more than half of the fruits of your labor will be given away to others.

Since gold was controlled by central banks around the world and reduced to investment products and decorations, there has never been any decent currency in the world, and the US dollar is just among the garbage. A slightly less trashy one.

What is a decent currency? It depends on what conditions are met to maintain its purchasing power.

In "The Future of Money", the author gives a standard based on the theory of Austrian economics - the triple marketability of money determines its quality as a currency.

The first is marketability in terms of transaction standards. That isIt can be divided freely, and the physical properties of each unit are indistinguishable to facilitate transactions of various denominations.

This is basically satisfied by gold, but paper money is stronger than gold, which is one of the reasons why people initially accepted currency certificates. Yes, paper money was still called "currency certificate" at that time.

The second is marketability in terms of space and whether it is easy to carry and used for cross-regional transactions. Gold was not ideal at this point, which gave later paper money an opportunity.

The original banknotes were just currency certificates. People deposited real currency-metal currency in banks, and the banks kept it for them and gave customers a currency certificate to retrieve the currency in the future. This is how the gold standard works, supplementing the precious metal's shortcomings as currency.

The third is the most important, that is marketability over time, that is, its ability to maintain value. Corrosion resistance, stable properties and not easy to be lost are necessary. In addition, it cannot be too easy to add new currency. There is a concept called stock-increment ratio. If the increment is very small relative to the stock, that is, the quantity of this currency increases very slowly, then the risk of more new currency diluting its own purchasing power will be very small, and the currency's ability to maintain value will of course be strong.

In this regard, gold is undoubtedly the currency of choice. Its chemical properties are stable and not easily lost, and it cannot be synthesized artificially. Its stock on the earth is certain. Its increment as a currency only depends on the mining speed. It is difficult to mine and extract, so it has become the hardest currency in history. Generation after generation, people have used it to store their wealth, and it remains the most important investment today.

Under the gold standard system, currency certificates are not real currency, but currency substitutes. Theoretically, banks can only issue currency certificates equal to the amount of gold in their inventory, otherwise they will face the risk of a run. A run means that all users of the bank come to ask for gold back, but the bank cannot produce enough gold for users to withdraw due to excessive issuance of currency certificates. At this time, the bank will be seriously dishonest and even go bankrupt. The ability of banks to create inflation is therefore greatly limited.

However, the right to mint money was gradually completely monopolized in the step-by-step degradation of the modern banking system, and currency certificates gradually evolved into legal tender until they were untied from gold and then completely released. Monopolies have never been able to control their own money-printing hands. Creating inflation is as easy as eating and drinking. The history of fiat currency is the history of one round of inflation after another. Nowadays, people always lament that money is becoming less and less valuable. This is a real experience of inflation.

As long as Bitcoin is not technically compromised, it perfectly meets the above criteria.

First of all, the marketability of transaction standards. The smallest unit of Bitcoin, "Satoshi", is 1/100 million of a coin, and 1 coin is divided into 100 million satoshis. If one day 1 coin can be worth 100 million, then 1 satoshi is equivalent to 1 yuan. I explain this in such a long way, just to make it clear that you do not have to own one coin to be called owning Bitcoin. You can own 0.001. Painless division is better than any currency in human history.

Marketability in the second spaceSex, cross-regional transactions. All you need is a blockchain wallet address, which is a string of codes, to store all your Bitcoins. Of course, you can also store it in multiple addresses and then use it for transactions when and where conditions permit.

The third is marketability over time and the ability to maintain value. Bitcoin's preset algorithm determines that it has an absolute upper limit for mining. The later you go, the harder it is to mine, and the stock-to-increment ratio is extremely high. Now that the speed of mining coins is getting slower and slower, it is hard to imagine what the valuation of 1 coin will be when mining is close to the upper limit.

Bitcoin is of course at risk of being attacked and collapsed, but it also has a very strong defense mechanism. I don’t understand the technology and can only briefly explain my understanding. This understanding may be biased. It is recommended that friends who want to know more read specialized materials. For example, the book "The Future of Money" is easy to understand and suitable for us beginners.

This is a very cumbersome verification mechanism that solves the problem of trust. You can think of it as a ledger. If the information recorded in the ledger is valid, the coins in your wallet will be valid. Every new addition and transaction of Bitcoin on the blockchain must be recorded in every network node participating in it and must be verified by every node. Then the only way to hack Bitcoin is to shut down every server running it, but this is almost impossible, there are countless people around the world using it.

To put it bluntly, blockchain uses digital coding technology to simulate gold and achieve functions similar to gold as a trading medium. Whether it succeeds or not depends on how much consensus is formed, then all that is left is to wait for recognition. Nowadays, the rising prices are a kind of recognition. Real money is definitely the most reliable. Where the money flows, it shows where the most trust is.

Of course I am not advocating that everyone buy it. Investment is risky, the money is your own, and the future is unpredictable. Who knows whether you will buy at a high point or a low point, and whether you will succeed or not in the end.

This does not affect my admiration for its awesomeness. Nowadays, people have long forgotten what real currency is, and there are few opportunities to develop a correct understanding of currency. Bitcoin uses wave after wave of profit stimulation to teach us a lesson and impact our ideas. As a result, many people have the opportunity to regain the distant memory of honest money.

So whether it succeeds or fails, it does not affect it from becoming a great monetary practice.

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