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According to media reports on February 5, the blockchain-based digital bill trading platform promoted by the People's Bank of China was successfully tested, and the Digital Currency Research Institute under the central bank will be officially launched after the holiday. The People's Bank of China will become the world's first central bank to issue digital currency and carry out real applications. As soon as the news came out, it can't help but remind people of the "virtual currency" Bitcoin that has been hot since the second half of 2016.
The current state of Bitcoin goes against the original intention of “currency function”
Bitcoin, as a virtual currency, entered the public eye three or four years ago due to its sharp price fluctuations. On November 17, 2013, Bitcoin once rose to $1,216.73, even exceeding the price of gold per ounce at the time. Afterwards, due to the uncertainty of Bitcoin trading platforms, large fluctuations in delivery, and continuous illegal use, it was strictly regulated and even banned by governments around the world, causing the price of Bitcoin to fall all the way, once falling below $100, a 92% decrease from its peak.
However, starting from the second half of 2016, the price of Bitcoin, which had disappeared for many days, began to rise again. Especially at the beginning of this year, the price reached a high of nearly 9,000 yuan per coin, a 60% surge in two weeks, which attracted the attention of the People's Bank of China.
On January 25, 2017, the Beijing branch of the central bank issued a notice titled "On-site inspections of Bitcoin trading platforms will continue". Payment settlement, anti-money laundering, foreign exchange management, information and fund security will become important aspects of the rectification of Bitcoin trading platforms after the Spring Festival. The regulatory authorities reminded investors that they should pay attention to the trading risks of Bitcoin platforms and participate in investment activities with caution to prevent them from becoming a money laundering tool for underground banks or a means of transferring assets overseas. After that, Bitcoin quickly fell below RMB 5,500.
In fact, more than 80% of Bitcoins are in the hands of the 950 people who entered the market at the earliest stage, and there are not many Bitcoins actually circulating in the market. At present, 98% of these Bitcoins with low circulation are transferred back and forth in the hands of Chinese people, among which the three major domestic Bitcoin platforms account for more than 80% of the transaction volume, making Bitcoin like an antique, with only collection value but no circulation value, which is contrary to the original intention of Bitcoin - currency function.
This shows the characteristics of the Bitcoin Ponzi scheme - the investors who enter later give money to the investors in front. When 80% of the 13 million "circulating coins" in the market are owned by 950 people, it can be determined that this is a completely closed market that is not circulated. Investors should also be aware that they are participating in a trading market that is manipulated by others. Facts have repeatedly shown that Bitcoin that has entered the financial market (platform) is a well-packaged and very typical financial scam.
Jeffrey Robinson, an American financial writer, spent two years researching the Bitcoin market. He believes that unlike bankers who committed serious crimes, the scam was not designed maliciously based on Bitcoin's technology and currency form. However, when everything happened, it would have become a scam that deceived millions of Bitcoin followers, and Bitcoin would be worthless.
“Virtual” Bitcoin is not “Virtualized Currency”
In fact, one of the main reasons why Bitcoin has become popular again recently is that some people have confused "currency virtualization" with "virtual currency", so people think that Bitcoin is currency virtualization. However, although Bitcoin was once sought after due to its "advantages" such as anonymity and complete decentralization, "virtual currency" and "currency virtualization" are completely different concepts.
What is virtual currency?
The European Banking Authority defined it in 2014 as: "A currency that is neither issued by a central bank or public institution nor necessarily linked to a legal tender, but is accepted as a means of payment by natural or legal persons and can be transferred, stored or traded electronically." Therefore, virtual currency is a form of digital currency that is not controlled by national financial institutions and is not real currency.
It can be seen that Bitcoin is a typical "virtual currency" - it is not a real currency or commodity, but it is disguised as a currency and commodity. The price of Bitcoin is artificially hyped up; the banker uses the continuous release of "good" news to deceive the successors, and this process repeatedly devours the wealth of countless investors.
However, many Bitcoin supporters believe that Bitcoin is the signal to open the era of legal tender. However, this statement is also the perfect packaging for this financial scam. As a supporting evidence, Bitcoin has not yet been accepted as legal tender by any country so far.
So, what is currency virtualization?
Currency virtualization is a fantastic blockchain technology that may be the future form of currency. Currently, companies around the world have invested hundreds of millions of dollars to build a business model for frictionless mobile assets based on it.
"Blockchain" and digital currency
With the rapid development of science and technology, scientists are using blockchain technology as a stepping stone to rapidly develop the virtualization of currency. However, those virtualized currencies are different from Bitcoin, and even the "blockchain" is no longer exclusive to Bitcoin.
For example, IBM's blockchain technology is being tested for tracking high-end goods, such as diamonds and art, to address theft and counterfeiting. Walmart is using blockchain to track food, potentially allowing the retail giant to respond more quickly to food safety issues that arise.
Currently, more than 50 of the world's largest financial institutions have formed a blockchain alliance, the R3 Blockchain Alliance, to jointly research and develop potential blockchain technologies.
In fact, there are a lot of mediation links in the existing banking system because there are a lot of problems with record keeping between banks, all of which require a lot of backend work and costs. According to Autonomous Research, by 2021, investment management companies will be able to save $16 billion in costs through blockchain.
The official launch of the Digital Currency Research Institute under the central bank shows that the People's Bank of China is accelerating the virtualization of currency, but this is different from abandoning the RMB and adopting other virtual currencies. Currency virtualization is actually the digitization of legal currency, such as WeChat payment function, Alipay and other payment methods, which still use RMB, rather than virtual currencies such as Bitcoin, Litecoin and Q Coin.
In this regard, Bitcoin is a digital currency that attempts to change the rules of currency issuance, while currency virtualization changes the method of payment. The two are different in nature.
With the rapid development of the Internet, the voice of virtual currency in the European and American financial circles is getting louder and louder, and Bitcoin, as an electronic digital virtual currency, may become a thing of the past. So far, a Bitcoin transfer payment takes 1 hour, which is far less convenient than Alipay. Once the virtualization of legal currency can become mainstream, the end of virtual currencies such as Bitcoin may be imaginable. |
