Real estate investment expert Ou Shen: Bitcoin value is overestimated 1,000 times

Original title: How much is Bitcoin worth#F1000

This article is adapted from the article “Currency, Seigniorage and Bitcoin” on December 21, 2013. It has been amended and deleted. [1]

How much is Bitcoin really worth.
It is, as some people say, worthless and a pure and complete Ponzi scheme.
Or as some people say, the star of the future, the hope of tomorrow.

Or, can you give a rough estimate of Bitcon's value?
Even if you can't give the exact value, it would be good if you can be accurate to the order of magnitude.
Worth 100~1000 yuan.
It is still only worth 0.01~0.1 yuan.

Currently, all domestic analyses of Bitcoin are wrong.

1) Blood of the Mountains and Rivers

First, let’s look back at the old article “Currency, Seigniorage and Bitcoin”.
In the old article, we asked three questions;

1) In 1937, the Kuomintang fought against the Japanese and lost half of the country's territory. What impact did this have on the currency?
2) In 1949, the Kuomintang retreated to Taiwan, leaving only one province. What impact did this have on the currency?
3) If China gets the East China Sea oil fields, what impact will it have on the currency.

In 1937, the Anti-Japanese War broke out. The Nationalist army suffered a setback in the first battle and successively lost Shanghai, Nanjing and other places of wealth in the south of the Yangtze River.
A large number of Chinese people followed the government to move inland until the establishment of Southwest Associated University and continued the anti-Japanese war.

I would like to ask, if you lose half of your territory, how will the purchasing power of your "legal currency" change?
Suppose the Japanese did not steal your "paper money" and Chiang Kai-shek did not issue paper money indiscriminately.
When you escape to the southwest, will the 100 yuan in your hand still be 100 yuan?

The answer is that even if Chiang Kai-shek does not print money, your currency will depreciate.
It is still worth about the original 33 yuan.

Why? Because the education Chinese students receive is a completely poisonous education.
The Chinese people’s understanding of “monetary economics” is completely misleading.
The three main uses listed in Chinese textbooks: “measure of value, medium of exchange, and store of wealth” are all wrong.

Paper money itself has no value. Just because a 100-yuan note is printed doesn’t mean it can buy 100 apples.
The purchasing power of paper money depends on the physical object behind it.

Paper money is more like an "enzyme". It is put into the furnace to promote the transaction reaction.
How many grams of "enzyme" do you need to put in? It depends on how much you trade.

So in 1937, Chiang Kai-shek successively lost major commercial centers such as Tianjin, Shanghai, Nanjing, and Hankou.
There are very few territories where the "old legal tender" can be used.
If you lose 2/3 of your territory, your "legal currency" will only have a purchasing power of 33 yuan.

If you have 31 provinces and lose in the end, only one province is left to escape.
Then your currency will only have 3% purchasing power.

2) Seigniorage

In 1937, Wang Jingwei organized a puppet government.
The first thing the puppet government did was to announce that Chiang Kai-shek’s “legal currency” could not be used in the Wang-controlled areas.
And "counterfeit currency" was printed and issued separately.

Please tell me, how do we calculate the value, profit, and gold baht of counterfeit currency?
The answer is that counterfeit currency can be traded and circulated in about 10 provinces in the Wangtong area.
The total market value of counterfeit currency is roughly proportional to these 10 provinces. It is a proportional function of the commercial circulation of the 10 provinces.

From this we can see that the amount of currency a country can issue is actually a conserved quantity.
Its total currency value is proportional to the country's GDP, or proportional to several multiples of the country's commercial GDP.

If the country is lost, the territory actually controlled by the "gun barrel" will be reduced, and the circulation area of ​​the paper currency will be immediately reduced.
The gold content of each banknote decreases.

The so-called "seigniorage" refers to the control of hundreds of thousands of square kilometers by the barrel of guns.
Then the administrative regime will definitely require that its own currency be issued within its jurisdiction, and only its own currency can be circulated.

Article 16 of the "People's Bank of China Law" stipulates that "the legal currency of the People's Republic of China is the Renminbi."

Ladies and gentlemen, everything that is enacted into law has profound meaning.
There are layers of truth behind every sentence.

"Renminbi is the only legal tender", why do we specifically highlight this sentence?
This ensures the uniqueness of the seigniorage.

In Luohu and Gongbei ports, there used to be guests from Hong Kong and Macau who would pay for a bowl of noodles in Hong Kong dollars.
Since then, the People's Bank of China has been treating this as a serious threat and has launched several special investigations to resolutely stop such behavior.

Why. A bowl of noodles costs dozens of yuan, why make such a fuss.
The problem is that "Hong Kong dollars cannot be used for payment" and "RMB is the only legal currency in China."
The monopoly and exclusive trading of currency is a big business. The seigniorage must not flow out.

3) American Seigniorage

Having said that “every country, in its internal affairs, will formulate its own currency”, “seigniorage is a land tax”.
But on a global scale, there is one thing that cannot be controlled: international trade.

What currency is used to settle international trade? This is a huge profit.
Generally speaking, you can estimate around 1%.
International trade is calculated in the tens of trillions of dollars. It is a huge sum of money no matter who settles it.

The answer to this question is USD .
How the US dollar became hegemonic is a long story. The Bretton Woods system.
Many people are criticizing the hegemony of the U.S. dollar, but it is unclear what the "hegemony of the U.S. dollar" is.

Even last time I had dinner with someone, a guy asked me, "International trade settlements are all in USD, so why does the United States benefit from it?"
I looked at him coldly for a long time and said, "How could you be without inventory when doing business?"
"When you buy and sell things, will your current account have no balance?"
"How much is the total current account balance in the world?"

Except for USD's hegemony in "international trade".
Some small Latin American countries, including those in Southeast Asia, have very chaotic political systems and their domestic economic order is in a mess.
Its underground economy involves a large amount of “dollar settlement”.
(When you go to Myanmar, you buy a bunch of bananas in USD)

This kind of thing, literally speaking, is strictly prohibited by the "Myanmar government".
If everyone in Myanmar uses USD, it means that no one will use the Myanmar currency. [2]
The Myanmar government will not be able to enjoy the benefits of "excessive issuance of Myanmar currency".

However, due to poor management by the executive government, many weak countries cannot even establish grassroots organizations.
This money is simply lost.
When Burmese people trade in USD, the "seigniorage" is earned by Americans.
Zimbabwe has announced seven foreign currencies, including RMB, which the Chinese welcome.

4) Bitcoin

Okay, a gorgeous dividing line.
————————————————————

The above three paragraphs are all old articles from "Currency, Seigniorage and Bitcoin".
It roughly explains the principle that " currency value = currency use scope = gun control scope ".

If Chiang Kai-shek loses the war of resistance, and only one of the 31 provinces remains, the currency he "issues" will have nowhere to be used and will be like waste paper.
On the contrary, after the Nationalist Army restored the country in 1945, the scope of use of "legal currency" greatly increased, which would lead to an increase in materials and deflation.

Now let’s take a look at the weird “Bitcoin”.
The trend of Bitcoin has deviated far from the original intention of its founder and its initial goal.

Satoshi Nakamoto, the founder of Bitcoin, originally envisioned designing a currency "out of the control of the central government."
Bitcoin does not indiscriminately issue paper money.
Being untraceable can achieve complete anonymity.

The world's first Bitcoin transaction was to buy a pizza with 10,000 Bitcoins. This amount is said to have exceeded $10,000,000 USD.

But does everyone care about anonymous consumption now? No, they don’t.
What everyone is concerned about is this:

Or maybe this:

Look around you, everyone is discussing excitedly, passionately, and passionately;
“Bitcoin falls below 3,000”
“Bitcoin rises above 5,000”
“Bitcoin breaks through $1,000”
“Bitcoin hits new high again”

Almost everyone was excitedly discussing the trend of Bitcon, talking about making money and swing trading.

Faced with this situation, I just want to shout out:

Can Bitcoin buy coffee today?

(The world’s first automatic coffee machine that accepts Bitcoin. But the problem is that no retail investors hold Bitcoin)[3]

When countless people are eagerly discussing what the price has reached on the "Bitcoin" trading platform.

The ups and downs are thrilling.

I just want to ask you one question, can Bitcoin be used to buy pizza now?
How many offline merchants that support Bitcoin use Bitcoin for transaction settlement every year? How much is the amount of Bitcoin and what is its market value?

At present, the total market value of mined Bitcoin has reached 16 billion US dollars.
However, retail transactions settled using Bitcoin are still close to zero.

Bitcoin still cannot be used to buy pizza, mobile phones, or mineral water.
Since the founder of Bitcoin, Satoshi Nakamoto, is an invisible person, there is no institution or organization that is paving the "offline transaction" of Bitcoin.

Just imagine, Apple Pay has created a huge amount of public opinion, with Apple fans being the most stubborn and die-hard fans.
AP is still not popular now.
And when will anyone use your Bitcon Pay?

To use President Chiang as an analogy, Chiang Kai-shek currently only has one province under his control.
Without money and food, the GDP is pitifully weak.
What can support the “total value” of the currency of 16 billion US dollars?

Generally speaking, we can roughly take a ratio of 1%
If the market value of Bitcoin is 16 billion US dollars, then the ecosystem corresponding to Bitcoin is the "Bitcoin Empire";

Amounts of all transactions settled in Bitcoin;
It should be around 1.6 trillion US dollars.

Every year, the total transaction amount for buying coffee, pizza, Amazon shopping, and DVDs in the underground market is about 1.6 trillion US dollars.

Please tell me how many offline Bitcoin transactions there are now.
What should be the true value of Bitcoin?

Overestimated 1000 times.

[1] “Currency, Seigniorage and Bitcoin” http://115.159.211.105/forum.php?mod=viewthread&tid=17963
[2] 1 USD = 1350 MMK
[3] "In-depth Introduction to Bitcoin - Garage Coffee News" http://www.8btc.com/bitcoin-foundation