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In the tide of decentralization, Bitcoin is gaining more and more support.
In the fight between retail investors and the centralized power of Wall Street, Tesla founder Elon Musk, who supports retail investors, recently said that Bitcoin is on the verge of being more widely accepted by investors, and he regretted not buying it eight years ago because he was slow to understand it.
Even more avant-garde, some places have even begun to consider paying employees with Bitcoin. On February 3, according to foreign media reports, the Miami City Government will soon be able to choose to pay employees with Bitcoin. Mayor Francis Suarez said in an interview that if he wants to expand the use of Bitcoin throughout the city, practical ways include paying government employees with Bitcoin. Mayor Suarez is also considering using Bitcoin to fund his re-election campaign. At the end of last year, the mayor said that in an "extremely unstable year", Bitcoin is a "stable investment." Last week, he uploaded a white paper on Bitcoin on the government website, which read: The city of Miami believes in Bitcoin, and I will work hard to make Miami a center for crypto innovation.
Last week, Virginia-based software development services provider Sequoia Holdings offered employees a way to invest part of their salary in Bitcoin ( BTC ), Bitcoin Cash ( BCH ) or Ethereum ( ETH ).
However, the decentralized nature of Bitcoin and gold actually challenges the central power of various countries. On February 3, Ray Dalio, founder of Bridgewater Associates, wrote in an article that governments will not allow Bitcoin and gold, two major assets, to be more attractive than their own currencies. Every government hopes to strengthen the power to control currency issuance. The more successful Bitcoin is, the more likely it is to be banned by governments. Dalio also said that Bitcoin is a great invention and looks like a long-term option with an unknown future. "Therefore, the amount I invest in Bitcoin will be limited to a range that I would not mind even if I lose 80% of it."
Can legal digital currency be separated from the central bank?
Democratic disputes exist not only in Myanmar and the United States, but also in the U.S. stock market, Wall Street, and the Federal Reserve. In the context of retail investors fighting against the "central power" of Wall Street, Tesla founder Musk has set his sights on Bitcoin. As of 18:00 on February 3, the trading price of Bitcoin remained around $36,000.
A few days before Musk spoke out about Bitcoin, he also supported retail investors in their fight against Wall Street. Musk said in a conference call: "I do think that a lot of retail investors actually have deeper and more accurate insights than a lot of large institutional investors, and they have better insights than a lot of analysts."
Retail investors' fight against Wall Street and the rise of Bitcoin have a subtle philosophical relationship. They both represent the "decentralized" philosophy of Internet democracy.
Bitcoin is even more of a banner in the "decentralized" world. In fact, with the central banks of various countries putting digital dollars, digital euros, and digital yen on the agenda, Bitcoin is more popular, not the other way around. Against the backdrop of the central bank's launch of digital currencies, Bitcoin has risen instead of falling, with its price increasing nearly three times in the past year. In response, Musk emphasized in a live webcast that Bitcoin is on the verge of being more widely accepted by investors and regretted not buying it eight years ago. He emphasized that he was a little too slow to understand.
Why is it that when governments around the world are about to launch digital X-yuan, Bitcoin is not only not eliminated, but becomes even more powerful? Securities China reporters noted that to understand this rare phenomenon, we need to understand the word "decentralization".
It is obvious that in the 21st century, almost everything has a "central power", a family, a kindergarten, a startup company. In contrast, "decentralization" weakens the control of central power, and has therefore become the greatest spirit of blockchain. The biggest attraction of cryptocurrencies represented by Bitcoin is decentralization, and the total amount is constant. In theory, gold is also a decentralized asset. The most straightforward understanding of decentralization is that it has no power center, and its total amount is not controlled by any institution, issuer or government.
The opposite of the "decentralization" of gold and Bitcoin is "centralization". The characteristic of "centralization" is that the center decides everything. Centralized currencies include about 170 legal currencies in the world, such as the US dollar, Japanese yen, British pound, etc. These legal currencies are all controlled by the government. For example, the Federal Reserve, as the central bank of the United States, will start the printing press mode at the "appropriate" time, and piles of cheap white paper will be turned into US dollars with the symbol of 100 on the factory assembly line.
Market insiders pointed out that the digital dollar, digital euro, and digital yen launched by central banks of various countries are bound to be controlled by their governments. Although these currencies are digital, they are not "decentralized" but typical "centralized" currencies. In essence, they are still the continuation of paper currency.
Obviously, it is impossible for governments to give up their control over the issuance of legal tender. This is why Bitcoin has become more popular as governments are planning to launch digital dollars, digital euros, and digital yen. After news of central banks preparing digital currencies began to spread in 2019, the price of Bitcoin has tripled in one year from the beginning of 2020 to date.
Digital Dollar Highlights Bitcoin’s Advantages
Musk has long clearly seen the huge difference between "decentralization" and "centralization" in currency issuance.
"The large-scale issuance of currency by governments and central banks makes Bitcoin look more reliable." Musk said in mid-May last year that although he only held 0.25 bitcoins at the time, he trusted Bitcoin more than government-issued currency.
Musk made this point of view in the context of the fact that the total amount of Bitcoin is constant, only 21 million, and its output is not controlled by any government or institution, and no power can control the number of Bitcoins. Correspondingly, with the COVID-19 pandemic, central banks represented by the United States have restarted QE again, printing US dollars or other countries' currencies on a large scale. Obviously, power has a significant impact on the currency issued by the central bank.
These phenomena have a historical tradition. From the 14th to the 21st century, governments around the world have turned on the printing press whenever they encountered a major crisis. During the 2008 financial crisis, major central banks around the world launched a massive quantitative easing program, injecting huge amounts of money into the economy to prevent economic collapse. With the COVID-19 pandemic, central banks, represented by the United States, have once again restarted QE, printing dollars or other countries' currencies on a large scale.
The reason is simple, because under the logic of "centralization", the government controls the right to issue currency and can issue as much as it wants. It is also because of this background that once the legal currency begins to depreciate, funds begin to embrace gold and Bitcoin, because the total amount of the latter two assets is fixed.
Therefore, although the digital euro, digital dollar, and digital yen have been put on the agenda, since these digital currencies are still issued by the government, they have stimulated the strong position of Bitcoin.
On February 1, Beijing time, Tesla CEO Elon Musk emphasized in a live webcast that Bitcoin is on the verge of being more widely accepted by investors and regretted not buying it eight years ago. Musk said in the live broadcast: "I am a supporter of Bitcoin. I think Bitcoin is on the verge of being more widely accepted by investors." Musk also said that he should have bought Bitcoin eight years ago. He said: "I was a little slow to understand and realized it a little late. But at present, I really think it is a good thing."
The more successful Bitcoin becomes, the more likely it is to be banned
Against this backdrop, institutional investors have also begun to increase their bets on Bitcoin.
Business intelligence software giant MicroStrategy was revealed to have further increased its Bitcoin holdings. Media reports on Tuesday said that MicroStrategy invested $10 million to buy about 295 Bitcoins at an average price of $33,808 per Bitcoin. The company's CEO Michael Saylor said on social media: "We now hold 71,079 Bitcoins, with an investment of $1.145 billion, at an average price of $16,109 per Bitcoin." MicroStrategy first announced the purchase of Bitcoin in August 2020, when it invested $250 million to buy 21,454 Bitcoins. It has now become the largest "Bitcoin whale" among listed companies.
At the same time, a Bank of America survey showed that Bitcoin has become the most crowded trade in the world. A survey conducted by Bank of America this month showed that when investors noticed signs that Bitcoin long positions had reached unprecedented levels, both retail and institutional investors joined the ranks of chasing the rise. The Bank of America survey does not necessarily mean that more fund managers hold Bitcoin. But it undoubtedly reflects the high popularity of Bitcoin, which has risen 300% in the past year, and even some financial giants have been driven.
However, Bitcoin itself has begun to involve political philosophy issues, and retail investors banding together to fight Wall Street is itself a similar political philosophy topic. Anthony Scaramucci, founder of U.S. hedge fund Skybridge Capital, said that more and more retail traders are avoiding Wall Street, driving up stocks such as GameStop Inc., which shows that the outlook for Bitcoin is positive. This is because this phenomenon reflects the guiding ideology behind Bitcoin - financial decentralization.
But then again, Bitcoin is decentralized, its total amount is constant, and it is not controlled by any power or government. No power can create a new Bitcoin beyond the 21 million. But the more this is the case, the greater the risk of Bitcoin in the eyes of some observers.
On February 3, Ray Dalio, founder of Bridgewater Associates, wrote an article about Bitcoin, arguing that every government wants to strengthen its power control. If the government intends to ban the use of Bitcoin, most Bitcoin users will no longer be able to use Bitcoin, and its demand will drop sharply. The more successful Bitcoin is, the greater the possibility of the above situation. In this article, he believes that since the establishment of the world's first central bank (the Bank of England established in 1694), for reasonable reasons, governments have wanted to control currency and protect their exclusive rights to issue currency and credit within their own countries.
“When I put myself in the shoes of these government officials, watch their actions, and listen to what they say, it’s hard for me to imagine that they would allow Bitcoin (or gold) to become more attractive than the currencies they issue. I suspect the biggest risk to Bitcoin is that it succeeds, because if it succeeds, governments will try to stifle it, and they have every power to do so.
Obviously, when a class in the first grade of elementary school will show off the power of the class monitor, which of the 197 countries and regions in the world that are accustomed to centralized power will be willing to give up the most attractive financial centralized power? (Securities Star) |
