Li Xiong: Should Bitcoin be a currency or a speculative product?

The easiest way for ordinary people to understand Bitcoin is to understand it from the perspective of stocks and securities, or investment? Or speculation? At present, the price of Bitcoin in China has exceeded 18,000 yuan, which is an extremely critical psychological price for Bitcoin investors. Will the price of Bitcoin go to 18,000 yuan in the future? But today I will not talk about the price of Bitcoin, but the topic of "Should Bitcoin be a currency or a speculative product?"

Bitcoin will not become a currency, but more of a speculation

Many experts and scholars have studied that the total amount of Bitcoin is 21 million, and this upper limit has become their target. If Bitcoin is circulated as a currency, although it will not cause inflation, it may cause deflation. It should be noted that any currency with the possibility of deflation is " suitable for speculation, not investment ."

Let me explain a very simple logic. If you divide a certain amount of currency into 100 parts and you own one of them, it means that you own not only 1% of the wealth of the society, but also 1% of all wealth created from that time on. This is extremely unfair to the distribution of social wealth.

Let’s take a look at Bitcoin. The upper limit is 21 million, which is like dividing a cake into 21 million shares. If you hold one of them, as funds continue to flow in, the Bitcoin you hold will become more and more valuable. This is why the price of Bitcoin will continue to grow in the future. So do you think Bitcoin should be a currency or speculation?

Since I started working in the Bitcoin industry, I have always had a wish that Bitcoin is an investment product, not a speculative product, so my team and I have developed some very good market analysis products, hoping to standardize the industry. However, based on thousands of years of currency history or financial knowledge, Bitcoin will not become a currency in circulation, and even now it should be an unprecedented speculative product.

The role of money is to measure society's wealth fairly

The significance of the existence of money is not only to serve as a general equivalent, its role is to fairly measure social wealth, and it cannot be equated with "labor value". If people continue to work and create wealth, then the overall social wealth will continue to grow. If our labor is still meaningful, then the currency will continue to increase to meet the actual needs of the growing social wealth.

After Qin Shihuang unified the six kingdoms in ancient times, he unified the currency called "Qin Banliang". If other parallel currencies (such as gold) were not considered at this time, only 100,000 copper coins (Qin Banliang) were issued, representing an economic volume of 100,000 yuan at the time, just like Bitcoin, and it would no longer increase. Then Qin Shihuang circulated 90,000 copper coins to the people, and took the remaining 10,000 copper coins to Penglai (Japan) to find the art of immortality. Of course, the Qin Dynasty is no longer there. Assuming that the currency is still 100,000 copper coins, thousands of years later, China's economic volume has developed to 100 trillion, then one copper coin is 10 trillion yuan. Assuming that Qin Shihuang really found the art of immortality and did not die, even if he did nothing for thousands of years, just long enough to share the wealth of Chinese society for thousands of years.

What is this wealth? For thousands of years, every time the wealth of China grows, from the food produced by farmers, the railways built by workers, to the spacecraft produced by aerospace technology, etc., it must be counted as Qin Shihuang's. So if Bitcoin is really a currency, those who participated in it early and hoarded it (see the Bitcoin Wealth List) will be really happy.

Screenshot from sosobtc statistics: Top 10 Bitcoin Rich List

If the above logic is valid, assuming that Bitcoin is a currency, because everyone knows that its total amount is limited, then its price will continue to rise, and no one will spend Bitcoin, and it will not circulate in the market, because this Bitcoin may be worth more than a million dollars in the future, and everyone will hoard Bitcoin. If it is really a currency, our trading method should return to barter. What I mean is that there will be no currency.

Anything with a cap becomes speculative

We often hear that "scarcity makes things valuable." Bitcoin has been hyped up to $2,500, but the price shows no sign of stopping. You should know that it was less than $500 per coin on this day last year. Even if all 21 million were bought at that time, it would only be $10 billion. If big funds wanted to enter the market and take control, buying half would be enough. Even with leverage, it may not be enough for the big funds to play for a few minutes.

Although Bitcoin had a great vision when it was created: a decentralized payment network, its underlying blockchain also has greater ambitions, it can transform all current underlying technologies, and then what? Bitcoin will only attract more and more speculative attention. This is a zero-sum game. In the speculative market, the gain of one party must mean the loss of the other party.

I have been in contact with Bitcoin for more than four years, have done a lot of research on it, and have witnessed one wealth creation myth after another. On the one hand, it can indeed provide a viable solution to the issue of social trust; on the other hand, it provides direction for the development of the Internet in today's world. Although it is not so perfect now, I still firmly believe that it represents the future - the valuable Internet.

Finally, are you ready to speculate or invest in Bitcoin?

Article author: sosobtc Li Xiong

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