A 1.5 million-fold increase in 4 years! How terrible is Bitcoin, which is regulated by the central bank?

As a Beijing native, Bange has witnessed the skyrocketing housing prices in Beijing from 10,000 to 100,000 in 10 years.

I thought that in Bangge's world, there was nothing more important than the increase in house prices, but too yong too native! The recent overwhelming news about Bitcoin has once again refreshed Bangge's three views!

As of 15:00 today, the price of Bitcoin is 6,800 RMB, which means that only more than 500 Bitcoins are needed to buy a small apartment in the 3rd ring road of Beijing; only 200 Bitcoins are needed to buy a top-of-the-line Mercedes-Benz S500.

And this is the price after the central bank’s interview and regulation.

The central bank’s official website shows:

On the afternoon of February 8, the inspection team of the Business Management Department of the People's Bank of China interviewed the main persons in charge of nine other bitcoin trading platforms in Beijing, including "China Bitcoin", "Bitcoin Trading Network", "Good Bitcoin", "Yunbi", "Yuanbao", "BTC100", "Jubi", "Bibei" and "Dahonghuo", to inform them of the current problems of the bitcoin trading platforms, point out the possible legal risks, policy risks and technical risks of the trading platforms, and understand the operation of the nine trading platforms.

At the same time, the central bank has made clear requirements for Bitcoin trading platforms:

• They shall not engage in illegal financial businesses such as financing and currency lending, and shall not participate in money laundering activities;

• Must not violate the state's financial laws and regulations on anti-money laundering, foreign exchange management, payment settlement, etc.;

• It shall not violate national taxation, industrial and commercial advertising management and other legal provisions.

On the evening of February 9, BTCChina, Huobi.com, and CoinBank issued an announcement to suspend all withdrawals of Bitcoin and Litecoin. This is the third time the central bank has interviewed Bitcoin platforms since 2017.

Why did the central bank take such a big action?

Bitcoin is convenient, value-preserving, and easy to store, and its transactions are not controlled by traditional governments and state institutions. Of course, this means that it is easy to be exploited. The two most common ones are money laundering and illegal transactions.

Data shows that China’s bitcoin trading volume currently accounts for 90% or more of the world’s total, and a large amount of funds are still pouring into the Chinese market. Perhaps because of this, China does not recognize the legitimacy of bitcoin trading and continues to take measures.

How “scary” is Bitcoin?

1. A 1.5 million-fold increase in 4 years

Bitcoin was born on November 1, 2008, and 1,300 bitcoins could be exchanged for 1 U.S. dollar in 2009. It was not until February 9, 2011 that the price of 1 bitcoin reached 1 U.S. dollar for the first time.

But what was unpredictable was that in 2013, the price of 1 Bitcoin skyrocketed to US$1,200, increasing 1.5 million times in just 4 years!

On November 29, 2013, the trading price of Bitcoin on the popular exchange Mt. Gox hit an all-time high of $1,242, while the price of gold was $1,241.98 per ounce at the same time. The price of Bitcoin exceeded that of gold for the first time, and it even hit a sky-high price of 8,000 RMB on Huobi, China's Bitcoin trading platform.

(Picture from Cool Play Lab)

No wonder some people say that Bitcoin is more profitable than drugs.

2. The mysterious Bitcoin founder Satoshi Nakamoto

For a product with such a high return rate, the founder should show off his ability and respond to various rumors in the market. However, Bitcoin is just the opposite. People can only keep buying and selling the product, but they cannot know its founder. Meanwhile, news about the inventor of Bitcoin never stops on the Internet.

Among them, the person most likely to be Satoshi Nakamoto himself is Shinichi Mochizuki, an eccentric professor at Kyoto University.

Shinichi Mochizuki was once hailed as the person with the highest IQ in contemporary times.

Shinichi Mochizuki was born in Tokyo, Japan in 1969. He disappeared for nearly 20 years after graduating with a doctorate at the age of 23. He suddenly reappeared 20 years later with a paper, claiming that the paper solved the most legendary unsolved conjecture in the history of mathematics: the ABC conjecture.

On May 20, 2013, computer scientist Ted Nelson revealed on YouTube that the founder of Bitcoin, who goes by the pseudonym Satoshi Nakamoto, was actually Shinichi Mochizuki, a mathematics professor at Kyoto University.

And give three arguments:

• Shinichi Mochizuki is smart enough to come up with such a complex system as Bitcoin.

• Mochizuki does not use the conventional academic publishing mechanism. Instead, his habit is to work alone, publish papers, and let others understand them on their own.

• Shinichi Mochizuki's work area includes the mathematical algorithms of Bitcoin.

Although Nelson praised Mochizuki Shinichi with all his heart, many people still question whether Mochizuki Shinichi is Satoshi Nakamoto. The biggest question is: Although the founder of Bitcoin, Satoshi Nakamoto, is a Japanese name, it does not necessarily mean that this person is Japanese.

---It is said that only one person out of a million can understand the following content---

---Those who understand it will get rich---

3. A “currency” that will never inflate

It is reported that the Bitcoin system is like a huge, constantly updated ledger. Each page is called a block, and the blocks connected in chronological order are called the Bitcoin blockchain. A new block is added every 10 minutes, and the content inside is some transactions that have occurred in the system in the past 10 minutes. Every transaction will be fully recorded in this ledger, and Bitcoin is the money recorded in the ledger.

The issuance of Bitcoin is related to the rate at which data blocks are generated in the blockchain algorithm. The expected rate of data block generation is one every 10 minutes, but the number of newly issued Bitcoins in each data block cannot exceed 50, and this number will be halved every 4 years, so the total number of Bitcoins will not exceed 21 million by 2140.

The guarantee of the circulation volume determines that this kind of "currency" will not be subject to inflation , which means that in theory its value can be maintained just like gold and diamonds.

4. Bitcoin algorithm that is difficult for ordinary people to understand

Although Bitcoin is not a new concept, there are a lot of information and articles on the Internet about its principles, how to use it, its benefits and problems, etc., which are very popular. However, most people are very interested in Bitcoin but do not know much about it. Therefore, despite the huge profits of Bitcoin, it is still not popular in the market.

Baidu Encyclopedia explains the Bitcoin algorithm as follows:

Bitcoin is not issued by a specific monetary institution. It is generated through a large amount of calculation based on a specific algorithm. The Bitcoin economy uses a distributed database composed of many nodes in the entire P2P network to confirm and record all transactions, and uses cryptographic design to ensure the security of all aspects of currency circulation. The decentralized nature of P2P and the algorithm itself can ensure that the currency value cannot be artificially manipulated by producing a large number of Bitcoins. The total number of Bitcoins is very limited and has a strong scarcity. The total number is permanently limited to 21 million.

Bangge saw another explanation that is easier to understand in the public account gossip: (Although it is easy to understand, Bangge is still confused!)

Take cash, the most familiar payment method, as an example. When you "pay", a transaction is completed. First of all, the parties involved in the transaction are the customer, the customer's card issuer, the merchant, and the merchant's acquiring bank. When a customer buys something from a merchant, regardless of the entire processing process, the card issuer will record the expenditure (Debit) in this transaction, and the acquiring bank will record the income (Credit) of this transaction. As long as there are these two accounts, even if the card issuer and the acquiring bank are different institutions or even different countries, the subsequent settlement (which may be real-time) can accurately transfer funds between different users' accounts based on these two accounts. This is the so-called double-ledger accounting method, also called double-entry accounting method (double-entry accounting method).

Bitcoin's accounting method is based on double-ledger, but it is not exactly the same. Each transaction also has a credit and a debit (income of one party and expenditure of the other party), and there is an additional encrypted signature and verification to ensure that the signature is initiated by a legitimate Bitcoin account (also called verification or receipt). Therefore, Bitcoin's accounting method is also called triple-ledger accounting.

Another reason why it is not popular is that it consumes a lot of electricity.

5. Bitcoin mining farm: 600,000 yuan a day, 40,000 kWh of electricity per hour

"Mining" is a mysterious job that exists in Bitcoin. It means "digging" Bitcoin like digging gold. People who mine Bitcoin are called "miners."

The task of "miners" is to compete for the right to keep accounts. They perform hash collisions 24 hours a day, a process called "mining." The reason for this motivation is that whoever keeps accounts will be rewarded with the latest generated Bitcoin.

Currently, the total hash rate of the Bitcoin network has reached 2.36 trillion hash collisions per second, which is equivalent to the number of water drops in more than 200,000 50-meter-long standard swimming pools. However, even with such a large hash rate, it takes about 10 minutes to collide with a hash value that meets the requirements.

According to a “miner”:

The Bitcoin computing power of the mine he is responsible for is over 100P, accounting for 6% of the total computing power of the global Bitcoin network. That is to say, for every 100 Bitcoins generated by the Bitcoin network, 6 are mined by Sun Xiaoxiao's team, and they can mine about 100 Bitcoins a day.

If calculated based on the price of 6,000 yuan per bitcoin, these bitcoins are worth nearly 600,000 yuan. The mine currently consumes 40,000 kWh of electricity per hour. According to mainstream computing power, the global mine now consumes more than 600,000 kWh of electricity per hour, or 5.2 billion kWh per year.

Bitcoin: The currency of the future or a scam?

For Bitcoin players in China and even the world, although more and more countries have recognized the legal status of Bitcoin and its price has continued to soar in the 8 years since its birth, the number of trading scams, virus invasions, and false transactions that have followed has also been increasing. Therefore, many countries are still quite cautious about it.

As a virtual item, how to view the value of Bitcoin may be the biggest controversy since the birth of Bitcoin.

One extreme view is that: in the history of human crazy speculation, Bitcoin is just another replay of the tulip bubble, and even to some extent is no different from a Ponzi scheme;

Another extreme view is that Bitcoin is a revolution in the history of human currency and represents the ultimate direction of human currency in the future.

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