Lao Mao: Expansion and fork

Long time no see!

I know many friends are waiting for my updates, and there are indeed many things worth talking about recently. But I am really too busy at work recently! How busy? In the past week, I left the office after 12 o'clock in the evening for about 5 days, and one day I left at 8 o'clock the next morning. So, for me, sometimes I have the urge to write an article, but I have to give up because of physical reasons.

This weekend, I finally had some time to give myself a chance to rest. I will use it to dedicate this long "chat" to everyone, talking about the right and wrong of this early spring.

About expansion and forks

This is a very important matter. The recent sharp drop in Bitcoin prices is due to the impact of some people selling Bitcoin because they are worried that it may fork due to differences in expansion plans.

In fact, I am afraid to write about this topic because my readers have very different levels of understanding of Bitcoin. If I were to talk about the differences between different scaling solutions and the technical logic behind them, or even the causes and consequences of the origins of different scaling solutions and the collisions of politics, economy, humanities, and values ​​contained therein, that might be the content of a book, and the number of readers who have the patience to finish reading it might be only in the single digits.

My readers are mostly blockchain asset investment enthusiasts, so I might as well look at the disagreement on Bitcoin expansion from an investment perspective.

There is no doubt that due to the disagreement on capacity expansion, the price of Bitcoin has fallen sharply recently. For many participants who only invest in Bitcoin, this market is very embarrassing. Faced with the floating losses on the books, if they continue to buy, they don’t know whether they will become long-term holders. If they sell, they worry whether there will be enough price difference to buy it back.

I know that some friends who hold multiple blockchain asset types in a configuration way do not care about the rise and fall of Bitcoin, and even benefit a lot from the rise of hedge products, but don’t forget that Bitcoin is still the most important asset in the blockchain field, without a doubt. Therefore, it is still necessary to fully explore the investment logic of Bitcoin.

If we limit our view to the current few months, especially for novices, it is indeed a bit overwhelming. However, if we look at this issue from a longer time period, as an observer who has always paid attention to the issue of Bitcoin expansion, the current market reaction may be a bit excessive. The Bitcoin expansion itself is very much like "period", which will be debated after a while. The last debate on the classic plan was in March 2016. Is this expansion period a yearly cycle?

The purple part in the above picture is the trend of the number of classic nodes. In March last year, the number of classic nodes exceeded 50% of the core nodes, which is much more exaggerated than the current number of BU nodes. At the same time, the price of Bitcoin was hit twice from 3400 at the end of 2015 to 2500-2700. Calculated from the high point, the maximum decline reached 26%, and many people who originally held Bitcoin were forced to leave the market in this area.

As for this expansion dispute, due to the high price of Bitcoin and the Chinese government's regulation of trading platforms, the price has fallen by more than 30%. At the current price, before you sell, think about whether the expansion dispute is a life-and-death dispute or a trick of the city people?

In addition, let's look at it from another angle. In the worst case, even if Bitcoin forks, what will happen? You may get 2 types of Bitcoin! Ethereum forked, and an additional ETC was created, but the price of Ethereum still hit a new high, because the market will eventually choose something valuable, and the varieties forked from Bitcoin are regarded as dividends from Bitcoin, the "stock", so what? Even if there is a risk of discount in the short term, in the long run, no matter what method is used, as long as the expansion problem is solved, it will be of great benefit to the future growth of Bitcoin.

The market has already had a precedent. The fork is actually not that scary. What really finds the fork scary are the capital and interests behind it. For them, this may be a war that cannot be lost. As for the ordinary people who follow suit and chase the rising and falling prices, then they are really "investing in the oil industry" (if you don't understand this term, please search Baidu)!

The Bitcoin expansion problem will eventually be solved, but when? I don’t know! Will there be a fork? I don’t know! Will I have to have my period again? I don’t know! But the final solution to this problem will not be as earth-shattering as you think, just like the Y2K bug that people worried about in 1998, and the 2012 doomsday prophecy that people worried about in 2008. In the end, nothing happened, but the world’s pace of progress has not stopped at all.

At the end of this topic, I would like to give you a bowl of chicken soup:

Because of blockchain, the Internet has truly acquired the attribute of value, which has accelerated the pace of human migration from the real world to the Internet world. As a risk hedge against the unlimited issuance of real-world legal tender, even if we take some risks to allocate some core value products, what if there are a few crashes during the holding process?

The original title is: Warm and cold is the season