From double digits to $80 million, Bitcoin took only nine years

Original title: "Bitcoin is the Most Stable Store of Value in History"
By Daniel Jeffries

As Bitcoin exploded in popularity in 2017, there were more and more stories about this emerging thing that is still a little mysterious to many people. However, the image of Bitcoin in rumors has never been so positive. We heard that Bitcoin is crazy, violent, and unstable. Its price fluctuations make the so-called violent shocks of the fear index VIX look like a slow and elegant waltz. It is also not trustworthy. Every penny you invest in it will be swept away by ghosts.

In 2013, Paul Krugman, a “venomous” economist, wrote that Bitcoin is evil and there is no reason to prove that Bitcoin really has the ability to store value. Ray Kurzweil, known as the “prophet”, also made similar remarks. He said that Bitcoin has not yet shown any ability to impact the mature legal currency system. The stability that legal currencies represented by the US dollar can provide is beyond the reach of Bitcoin. And the outspoken billionaire Mark Cuban has also said on many occasions that Bitcoin is just a bubble.

We cannot deny that the above people are very smart and very successful. But regarding Bitcoin, they may have really made a low-level mistake.

Maybe Bitcoin is not stable in the short term, but what if you look at it over a longer time period? It is actually as solid as a rock! Don’t you agree? Let me explain it to you bit by bit.

May 22nd of every year is a special day for people in the cryptocurrency circle. This day is called "Bitcoin Pizza Day" to commemorate the first time in history that someone convinced another person to buy something real with a bunch of seemingly imaginary numbers. On this day in 2010, Laszlo Hanycz bought two large pizzas with 10,000 bitcoins. At that time, the price of these 10,000 bitcoins was $41.

Over the past few years, there have always been people who "ridiculed" Laszlo for eating two expensive pizzas and tracked the topic of how much these two pizzas are worth today. The value of these 10,000 bitcoins has also risen from tens of thousands of dollars, millions of dollars, to about 80 million dollars today. If the price of Bitcoin really rises to more than $100,000 in the future, the value of these two pizzas will rise to $1 billion.

Let’s not talk about the future. In 9 years, from 41 to 80 million dollars, is this storage capacity not “stable” enough? In other words, looking at the history of human society, can you find any regular investment targets that have such crazy performance in such a limited time? Anyway, I can’t find any.

So why are so many people still holding on to the so-called price instability?

In fact, this is related to the natural "quirks" of our brains. Certain thinking logic is like a bug buried in our brains, which will cause our understanding of things to deviate. This deviation in thinking logic exists in the minds of most people, and it will eventually form a "wrong consensus." Let me give you a few specific examples.

First, many people have a negative tendency to understand certain things, that is, we are more sensitive to bad news.

When we are online, the world is always on the brink of doomsday, terror and threats are everywhere, and there are always people telling us that the world is not far from collapse. For example, "as long as this law is passed", "as long as this person is appointed", "as long as this policy is not adopted", "as long as this is completely abolished", we will be destroyed. However, let me make a confused expression, and then let us look out the window, as if everything is still normal, the end of the world? Where is it?

It is precisely because of this kind of thinking that people, even after seeing that the price of Bitcoin has risen tenfold or even a hundredfold, do not focus on the sharp rise in price, but on the "possible 30% drop in the future." This makes no sense, but we always do this.

We have to admit that in primitive society, this sense of crisis could allow us to "live longer", but please wake up, it is already the 21st century!

Looking back at the history of human development, what we can never forget are always the major disasters. But what I want to say is that after humans "ruled" the earth, history is a process of "war interrupting peace" rather than "peace interrupting war". But why do we always remember the disasters that account for a small proportion? Because peace is not a good script.

No one wants to watch a play without conflict. You can't write a novel without conflict. Periods without conflict are inevitably glossed over in history books because they are very boring. On the contrary, our history books are always filled with coups, massacres, conspiracies, tricks, and, as we just mentioned, disasters. But the fact is that these contents that occupy 95% of the length of history books are actually only 5% of the real history. But how many people really realize this?

Now answer me a question, how many of the "happy" stories you see in the news can you still remember? On the contrary, news about trade frictions, debt crises, and the collapse of giants may leave a much deeper impression on you.

So the fact is, our human thinking is based on fear, and this has distorted our perception of the world. This is what we often say - we can't see the forest for the trees.

Another classic cognitive bias is that people don't like to look at things from a long-term perspective .

The above picture is a very intuitive example. Most people think that terrorism and war kill the vast majority of people, but it turns out that these two points are just the two almost negligible points in the upper right corner of the chart of the proportion of human lives taken. In contrast, heart disease and cancer, two factors that seem to be closer to us, directly cause a quarter of deaths.

Since 9/11, the United States has spent $2 trillion on terrorism. And how much do we spend on fighting humanity's two biggest killers? Just $10 billion per year. It's clear that even the world's "smartest" decision makers are not very good at assessing and responding to risks.

It’s easy to spot a snake scurrying through the grass, but we often overlook health threats that could actually take our lives. There’s often a disconnect between what’s actually happening and what we think is happening, and that disconnect is the root of all the pain and discomfort in the world.

If you still firmly believe that the value of 10,000 units of assets growing from $41 to $80 million in 9 years is "unstable", then I really can't change your obsession. I just want to say one thing, that is, when you encounter a problem, you might as well take a step back and see whether what you think is "real" from a broader and longer perspective, because the probability of error is really too high.

Source link: hackernoon.com