Is Bitcoin a "fairy" or a "demon"? Who can grasp the myth of making wealth?

Is Bitcoin a "fairy" or a "demon"? Who can grasp the myth of making wealth?

Bitcoin has been on the news recently. In addition to the eye-catching wealth-making stories, the "roller coaster" market is coming again. As ordinary people, we also want to peek into the secrets of Bitcoin. Many people have only known Bitcoin in recent years, and Bitcoin is not an investment object that ordinary people can handle. But if another new thing like "Bitcoin" comes, can we catch the wealth ride early and take a ride?

On February 22, 2021, Bitcoin hit a record high of $58,000 per coin, with a total market value of more than $1 trillion. It took only about 50 days to rise from $30,000 to $58,000, drawing a steep candlestick chart.

On February 26, some media revealed that the U.S. Securities and Exchange Commission plans to investigate Musk for allegedly using his celebrity influence to cause a rapid increase in the prices of virtual electronic currencies such as Dogecoin. As soon as the news came out, the prices of electronic currencies led by Bitcoin plummeted.

As of 15:30 on February 28, Bitcoin fell rapidly to around US$44,000. In about a day, about 96,000 Bitcoin holders suffered liquidation, with a total liquidation amount of approximately US$668 million.

Bai Shipan, a visiting professor at the National University of Singapore, pointed out that the total amount of Bitcoin is fixed, and the current production has slowed down. Many institutions have participated in the investment, which has driven up the price of Bitcoin. A few large investors are controlling most of the Bitcoin. The market lacks transparency, and the price is easily manipulated by large investors, with sharp fluctuations. For ordinary traders, there are great risks.

About ten years ago, someone used Bitcoin for the first time to shop, and 10,000 Bitcoins were only exchanged for two pizzas. Today, 10,000 Bitcoins are worth more than 400 to 500 million US dollars. How many times has it increased? Many myths of wealth creation have been performed during the surge in Bitcoin prices.

Is it "immortal"?

In 2008, a person with the online name Satoshi Nakamoto (the real person has never shown his face) published an article on the Internet titled "Bitcoin: A Peer-to-Peer Electronic Cash System". From then on, Bitcoin began to conquer the world.

Bitcoin is the first successful application of blockchain technology, which brought blockchain technology into the public eye. Today, blockchain technology is not only used in the financial industry, but also widely used in e-government, intellectual property, electronic evidence storage and other industries.

In summary, Bitcoin is a virtual electronic currency based on blockchain technology. It is a currency generated by a program and is generated according to the rules of the program. It has the following main characteristics:

1. The total number is limited, and there will be no over-issuance that will cause inflation. After every 210,000 blocks are created, the number of bitcoins produced will be halved. Now, the halving has happened twice. According to the algorithm, the production will become more and more difficult as time goes by. Around 2140, the total number of bitcoins will reach 21 million, and no new bitcoins will be produced in the future.

2. It adopts a distributed accounting method, which is decentralized and does not require an issuing agency. As long as you log in to the Internet, you can trade globally.

3. No government permission is required, and unlike traditional currencies, no bank involvement is required.

4. Rigorous encryption algorithm makes it impossible for anyone to forge, and transactions are convenient and safe.

5. Good anonymity, which well protects the privacy of the transaction parties. The currency only recognizes the technology, not the owner, and does not care about the identity of the account owner. It does not need to be bound to a bank card, and can be traded freely with strangers. This feature is favored by both buyers and sellers in illegal transactions.

Is it a "demon"?

Bitcoin also has disadvantages:

1. Bitcoin "mining" fields, a large number of "mining machines" are running, these machines are high-performance special computers, using chips to perform a large number of calculations. In theory, the more high-performance mining machines you have, the more you can mine. These machines also emit a huge amount of heat during the calculation process, so you often see a large number of fans running on the mining machines and on the shelves of the mining field. Some mining fields are simply built next to power stations, investing huge hardware costs and consuming a lot of electricity just to mine Bitcoin.

Bitcoin mining field

2. As Bitcoin became known to the public, many speculators blindly speculated on it, causing the price of Bitcoin to fluctuate, gradually deviating from the stability of currency and following the same path as speculative products. Some experts also believe that, like the tulip speculation, Bitcoin will sooner or later fall from the altar.

3. The anonymity of transactions is the favorite of black transactions. If certain crimes use Bitcoin as ransom, it will increase the difficulty of solving the case.

4. The total amount of Bitcoin is fixed, which will only lead to a continuous increase in value. Many people hoard it and expect it to appreciate. As a result, liquidity will be greatly reduced and the currency will lose its circulation function.

Bitcoin has the characteristics of fixed total amount, anarchy, anonymity, etc. Bitcoin is very popular in the black market and dark web, so policies of various countries have come.

The regulation of virtual currencies such as Bitcoin by various countries is generally divided into three types:

1. Strict control. For example, China, Russia and other countries.

In December 2013, the People's Bank of China and five other ministries jointly issued the "Notice on Preventing Bitcoin Risks", which clearly stated that Bitcoin is only a specific virtual commodity and does not have the same legal status as national currency. It is strictly prohibited to circulate and use it as currency in the market.

On the same day, the "Answers to Reporters' Questions on Bitcoin-Related Matters" was published, which pointed out that Bitcoin is just a special commodity on the Internet, and the public has the freedom to participate in transactions on the premise that they bear their own risks.

2. Take restrictive measures. The United States requires relevant institutions to operate with licenses, but the licenses are issued very cautiously and in small quantities; South Korea prohibits anonymous transactions in order to prevent crimes such as money laundering, and the Japanese government strictly requires exchanges to implement anti-money laundering measures.

3. No restrictions. For example, in Singapore, only business registration is required. Many innovative blockchain companies go to Singapore. Some people also call Singapore a paradise for virtual currencies. Many virtual currency ICOs are held in Singapore.

Singapore is a paradise for virtual currencies.

Fu Qiang, associate professor at the National University of Singapore Business School, believes that Bitcoin is a risky asset. Bitcoin is in opposition to the legal currencies of various countries. It is likely to be subject to stricter control by governments in the future, and investors need to be highly vigilant about risks.

Zhao Wei, an analyst at Kaiyuan Securities, pointed out that gold and U.S. bonds can become high-quality safe-haven assets because they have price stability, strong liquidity, and large market value. Compared with risky assets, gold's safe-haven characteristics also lie in its ability to hedge risks. Compared with gold, Bitcoin has large price fluctuations, weak liquidity, and a small market value. Looking at historical data, when risky assets fluctuate violently, Bitcoin often falls more sharply, often in the opposite direction of gold's trend, and its performance is far behind that of safe-haven assets such as gold.

In addition, gold can be made into jewelry that people love, and it is also an important raw material in industry. It has a wide range of applications. Instrument manufacturing, electronics industry, aerospace industry, etc. are all inseparable from gold. But what else can Bitcoin do besides being a virtual currency? Its price is completely hyped up by buyers and sellers.

The entire industry chain has a myth of wealth creation

Regardless of whether it is a "fairy" or a "demon", Bitcoin has created many wealthy people. We often see news reports that someone born in the 1990s has become a wealthy man because of Bitcoin. Many people envy and want to become these wealthy people.

Bitcoin has been developed for many years, and each link has reached a certain scale, which constitutes a huge Bitcoin industry chain. At present, the entire Bitcoin can be divided into invention, mining, trading, services and other links, and super-rich people have appeared in each link.

1. Invention

In 2009, a person named Satoshi Nakamoto published the design idea of ​​a cryptographic electronic currency for the first time and named it "Bitcoin". According to Bitcoin expert Sergio's analysis, Satoshi Nakamoto was the first miner who mined about 1 million coins for the first time. In the following ten years, Satoshi Nakamoto may have continued to increase the number.

Satoshi Nakamoto, the inventor of Bitcoin, has theoretically become the world's richest man. Satoshi Nakamoto is proficient in computer programming, encryption algorithms, electronic currency and other technologies. He is a genius across multiple industries and deserves to be rich. Now, blockchain technology is being applied in all walks of life, bringing huge social benefits.

In 2014, Dorian Nakamoto, an unemployed engineer living in California, was believed to be Satoshi Nakamoto, which attracted widespread attention.

2. Mining

Bitcoin mining machines have gone through several stages: server mining, graphics card mining, FPGA mining, ASIC dedicated chip mining, group mining

Ten years ago, I bought some servers from the Internet and planned to mine Bitcoin. However, I was laughed at by my classmates at a class reunion and missed the opportunity to become an early miner. It seems that "the truth is in the hands of a few people" may be right, because most people were not optimistic about Bitcoin at that time.

As upstream equipment in the Bitcoin industry chain, Bitcoin mining machines have also experienced periods of huge profits and stability, and sometimes, like Bitcoin, they have experienced hell and heaven.

On January 4, 2009, the era of popular Bitcoin mining began; in September 2010, because graphics cards are good at parallel computing, mining machines filled with graphics cards became popular; in early 2013, mining machines with dedicated ASIC chips appeared, and the ASIC mining machine era arrived.

According to online records, Carlson founded the largest Bitcoin mine in North America and was the first miner to become a millionaire.

Large Bitcoin mining farms often have rows and rows of shelves filled with high-speed mining machines. These professional mining machines are generally sold on major e-commerce platforms. Professional mining machine manufacturers have also become a base for wealth creation.

According to statistics, in the Hurun Rich List 2019, there are 15 blockchain practitioners on the list, including five people engaged in mining machine production.

Professional mining machine manufacturers have also become a wealth-making base due to the surge in Bitcoin prices.

3. Bitcoin transactions

In business, those who dare to try new things will succeed early. Most of those who engaged in Bitcoin trading in the early days made a fortune if they could calm down and hoard the coins.

In fact, people who trade Bitcoin can be roughly divided into four categories:

(1) Timely withdrawal

I also have friends around me who came into contact with Bitcoin early and invested a small amount with an attitude of playing around. As a result, they sold them after the price soared to more than 10,000 yuan. Some investors also took profits and exited the market early due to the previous plunge, and found that Bitcoin continued to soar, so they did not dare to chase high prices. As a result, they simply stayed away from it.

(2) Short-term speculation

Some people bought Bitcoin and just like speculating in stocks, they like short-term speculation, buying and selling back and forth, and are very busy. However, they find that they often fail to get the rhythm right, and not many people make money, and even many people lose money. Some experts repeatedly sell high and buy low and make considerable profits.

(3) Grievance type

Some people dared to try new things and bought some in the early stage, but then they forgot the password. Bitcoin wallets only recognize passwords, not people, which is equivalent to being on the sidelines.

(4) Long-term holding

There are also some investment experts who hold Bitcoin for a long time. There are not many such people. What makes them hold Bitcoin for a long time is that the number of Bitcoin is fixed and will become more and more valuable as global investors participate. As a result, these people are perfect players who hoard Bitcoin for a long time and gain huge wealth.

4. Bitcoin Services

Bitcoin is very popular and the service industry is also very profitable. For example, electronic currency issuance platforms and trading platforms often engage in both issuance and trading, and some people have made huge profits from this.

The transaction fee rate of the Bitcoin platform starting with H is 0.2%. If the transaction value of a Bitcoin is 100,000 RMB, then 200 RMB will be deducted for each transaction. Therefore, the platform is like a stock exchange, encouraging and hoping that everyone will trade frequently. Regardless of whether the trader makes a profit or a loss, the platform will make money, and the founding team of the platform will also make a lot of money.

5. Others

Many business celebrities have also participated in Bitcoin investment, greatly increasing the popularity of Bitcoin.

In December 2013, according to the Hong Kong South China Morning Post, "Superman" Li Ka-shing invested in a company engaged in Bitcoin business through his company, and the investment amount is unknown. Many investors followed Li's lead, and Bitcoin soared. Some media said that Li made a lot of money from it.

Tesla CEO Elon Musk vigorously promoted Dogecoin on the Internet, resulting in a surge in the price of Dogecoin and Bitcoin, and Musk made a fortune. Then, there were reports that the SEC would investigate Musk. As a result, the virtual currency market plummeted. Some netizens also suspected that Musk had made a fortune and fled ahead of time.

Tesla CEO Musk has been vigorously promoting Dogecoin on the Internet.

What abilities do wealthy people need to make a fortune from Bitcoin? First of all, they need to have a long-term investment vision. Ten years ago, when most people could not see clearly what Bitcoin was, you had to be optimistic about it and have firm confidence, because Bitcoin is a good speculative product. The anonymity of Bitcoin makes it a favorite of black market transactions...

Next, find the link you are good at and participate in it, any link can be invention, mining, trading, service, etc. When others are not optimistic, stick to your unique insights and try to participate early, the cost will be very low.

We have watched the Bitcoin train become a crazy race car, getting farther and farther away from ordinary people, and it is impossible to catch up. Therefore, it is recommended that ordinary investors just watch how Bitcoin performs. The most important thing is to study the people who have gained huge wealth through Bitcoin, learn from their experience, and look for new wealth trains in the future. Opportunities to make money will come sooner or later, and success will always belong to those who are prepared.