Learn what the big Vs in Fenda say about Bitcoin

Chapter 1 Bitcoin is a good thing

Netizen Yan Xingbo asked: Bitcoin has risen sharply recently. Do you have any new insights on Bitcoin?

Wang Xiaoshan: I never care about the recent rise and fall of Bitcoin. I don’t think it has anything to do with me if it rises eight times recently or falls by one third recently. I am optimistic about the long term. Although I don’t have many, I have more than a hundred in my hands and don’t want to move. I plan to use it for retirement. The rest of the time, it is more important to make money in RMB, or USD.

Learning experience: From the question of the netizen, it is obvious that the netizen knows that Wang Xiaoshan understands Bitcoin, so he asked him about his "new insights". However, Wang Xiaoshan did not answer with "new insights", but answered with the same views as before.

Wang Xiaoshan ignored the short-term fluctuations of Bitcoin and resolutely held it for a long time. He has more than 100 Bitcoins, with a total value of more than 450,000. This amount of assets should be less than 5% of Wang Xiaoshan's total assets. This also reveals an important principle of investing in Bitcoin: don't let your Bitcoin position affect your life. If your position is too heavy, you will not be able to ignore the volatility of Bitcoin, which will affect your life. I sincerely do not recommend allocating more than 5% of your total assets to Bitcoin.

Netizen Wenxiong asked: What do you think of Bitcoin and the technology behind it? Will Bitcoin eventually replace central bank currency?

Huo Ju: Bitcoin and the technology behind it are very innovative. It makes good use of current cryptography and cryptography. I should be the first person in China to write an article about Bitcoin. If not the first, then I am one of the first batch. However, I did not make any money from Bitcoin. I will tell you about my situation in advance so that my opinion will not be biased. It is unlikely that Bitcoin will eventually replace the central bank's currency. This is determined by the entire economic model and the model of state violence. Some banks may use Bitcoin to reduce costs, but it is unlikely to replace currency. Even if it replaces currency, it will be a long time in the future. Unless our current national system disappears, it is possible to produce such changes in the economy. Of course, it is possible that I am jealous because I did not make any money~

Learning experience: Huo Ju (why do I always think of Li Ka-shing when I see this name) knows the technical principles of Bitcoin very well, but he did not directly answer the question from netizens: "What do you think of Bitcoin and the technology behind it?" He just answered that it is a very powerful technology. However, the question asked by netizens is a subjective judgment, and it is indeed not convenient to answer it in 60 seconds.

Huo Ju believes that Bitcoin cannot replace the currency issued by the central bank, at least not before the national system disappears. Some netizens have also asked me this question, and my answer is the same as Huo Ju's. However, in addition to saying that Bitcoin's technology can be used by the central bank, I also have another reason: "diversification" is inevitable, and "unification" is difficult to achieve.

Netizens asked: What do you think of virtual currency? Bitcoin has risen sharply recently

Ba Shusong: Virtual currency is a currency that is still under exploration. From the perspective of usage, it is at the stage of storage function. In fact, it has not yet entered the settlement function and is still a long way from the investment function. I think it is a very promising currency with potential and future space, but it is still in its infancy. I have discussed the recent surge in Bitcoin with several experts. It may be related to the expectation of RMB depreciation since this year, and also to the trend of other virtual currencies.

Learning experience: Buffett gave a high evaluation to Bitcoin, believing that it is the currency of the future and that it is in its infancy. This means that now is a good time to invest in Bitcoin.

However, the concepts in Ba's answer are rather vague: storage function, settlement function and investment function. I think it should be understood that the definition of money in economics often has four functions: cash purchase; value storage; deferred payment (pricing in contracts) and accounting unit (assessing the amount of wealth of a person or institution).

What Ba meant should be that virtual currency currently mainly serves the function of storing value of currency. It cannot yet serve the function of purchasing cash, nor can it be used as a delayed payment or accounting unit.

Finally, Ba believes that the depreciation of the RMB this year has led to the appreciation of virtual currencies. It is indeed difficult to judge the market price, and there is probably no causal relationship.

Chapter 2 Blockchain is a good thing

Netizen linyuling asked: What impact do you think blockchain technology will have on the financial industry, and what preparations do we need to make to meet this challenge?

Ba Shusong: Blockchain is a new research field that we are focusing on now. It is an important concept of Bitcoin. It is essentially a decentralized database. Its core impact on the financial industry is decentralization and disintermediation. In fact, compared with the traditional banking industry, the traditional financial industry starts from private chains and industry chains, while blockchain is a public chain. The two influence each other. I think there will be a point where they are actually integrated.

Learning experience: Ba Shusong only answered the first question of netizens. His answer is that blockchain technology will definitely be absorbed by banks and transformed into a tool for banks, but it will still be very different from the current blockchain. Ba also looks at it from another perspective, that blockchain will directly affect the current central and intermediary status of the financial industry.

The blockchain and the current financial industry are not a life-and-death struggle. This is similar to the war between Internet finance and traditional finance. Bitcoin and blockchain are technological advances, and the current banking and financial industries can all use this technological progress. This is the process of technological progress promoting social progress.

Netizens asked: What is the investment value of Ethereum?

Ba Shusong: In order to answer this question, we specially found experts in the IT and financial fields to organize a discussion, because financial experts often do not understand IT technology, and those who understand IT do not understand finance. To put it simply, Ethereum is a commodity in the Ethereum system. Its value is to support the operation of the smart contract system, just like cars consume gasoline, and smart contracts consume Ethereum. The relationship between Ethereum, Bitcoin and the US dollar is getting smoother, and many trading platforms have emerged. Its price will fluctuate greatly depending on the market sentiment of the participants. This is a very important value.

Learning experience: In this answer, Ba believes that the value of Ethereum has two sources. One is that Ethereum is a necessary factor in building smart contracts on the Ethereum platform; the other is that Ethereum has a market for trading with the US dollar.

Based on these two factors, the reason why Ethereum is worth investing in is based on: first, whether there are enough smart contracts built on the Ethereum platform and whether these smart contracts have enough applications; second, whether the transactions between Ethereum and legal currencies such as the US dollar will become more and more smooth.

Judging from the current development of Ethereum, it is moving in the right direction of these two factors. More and more institutions are establishing partnerships with Ethereum, and more and more applications are being built on the Ethereum platform. There are also more and more trading platforms for Ethereum and legal currencies.

Chapter 3 Bitcoin is a bad thing

Netizen asked about the meaning of life: What do you think of Bitcoin?

Lan Xi replied: According to foreign media, the West is retreating, and almost all of them have retreated. Because Chinese players took over at high prices, the remaining players are basically Chinese. I personally think that after so many years of development, Bitcoin has attracted a lot of attention for its speculation, but it still lacks the most basic attributes at the currency level. If it is a currency, it not only has to rise and fall in exchange rates, but also has to have commercial recognition. However, there are still very few websites, including in gray areas such as Silk Road, where you can use Bitcoin as currency. At other times, it basically does not get market recognition, which is the most fatal. It doesn't matter how perfect your principle is. The currency still needs to be used in the end and recognized.

Learning experience: Lan Xi believes that Westerners used to play, but now they are withdrawing and no longer playing Bitcoin. Now it is mainly Chinese who are taking over at high prices. This is obviously wrong. There is no data showing that Westerners are withdrawing. On the contrary, the investment behavior publicly reported in the media is mainly Westerners. For example, blockstream, bitpay, 21 lnc, etc.

What Lan Xi said about Bitcoin lacking currency attributes can be said to be the mainstream understanding of society. The public generally recognizes that a commodity with a large exchange rate volatility does not have the currency attribute. In fact, currency has other functions besides being a means of cash payment. But it doesn’t matter. Denying Bitcoin’s currency attributes does not prove that Bitcoin is worthless. Let them deny it, after all, Bitcoin is still in its early stages of growth.

Lan Xi also judged that only very few merchants accept Bitcoin. This "very few" is indeed correct if compared with the global economy, but it only proves that Bitcoin has not yet grown. In fact, there are more than 100,000 merchants accepting Bitcoin, including world giants such as Microsoft, Google, and Dell.

Netizen Ding Libo asked: Do you pay attention to Bitcoin? Is investing in it in your financial planning?

The third son replied: I have a friend who lost everything because of buying Bitcoin, so I personally do not recommend investing in such a virtual currency, at least if you do not have a wealth of knowledge about Bitcoin, do not try this investment method. In addition, I prefer industrial companies. For such intangible things, I personally would not be inclined to buy and study them.

Learning experience: In any investment product, there are always people who fail. The friend of the Third Young Master lost everything due to investing in Bitcoin. This does not deny the investment value of Bitcoin. It only proves that the friend of the Third Young Master is not suitable for working in the capital market for the time being.

The Third Young Master denies the investment value of Bitcoin by citing the failed investment experience of a friend. This is just like persuading others not to drive or even go on the road just because a person had a car accident.

The third son likes industrial companies. "Industry" generally refers to industries with factories and machines. The Bitcoin mining industry is a typical industry, with factories, machines, electricity, three connections and one leveling, and labor. If this is not called industry, what else is industry?

The third son believes that Bitcoin is something that cannot be seen or touched. This is just a psychological barrier. The Bitcoin blockchain is a data chain that can never be deleted or tampered with. How can it be invisible? Mining machines can be touched. Bitcoin application apps can also be seen.

Netizen Xiaobao asked: Will Bitcoin become an international currency? Why are economists generally pessimistic, but the investment amount keeps increasing?

Wang Fuzhong answered: Bitcoin will not become an international currency. First, although Bitcoin has the characteristics of fixed total amount and traceable transactions, it is still possible to create a system similar to Bitcoin by developing another set of algorithms, and many sets can be created. Second, the number of Bitcoin is fixed, and if inflation does not occur, deflation will definitely occur, and the harm of deflation is much greater than inflation. Sometimes more currency is needed, and all previous economic crises have confirmed this. Third, what is the economic support behind it? It is very likely to be manipulated by humans, while the US dollar is supported by the country's credibility. As for why so many people invest? Because it is originally a speculative product, there is a lot of room for imagination, and it is easy to be speculated.

Learning experience: Wang Fuzhong’s answer was very organized. He only answered the first question of the netizen. I think his judgment was problematic.

First, Wang believes that the open source nature of Bitcoin will lead to copycats destroying Bitcoin's status. In fact, Wang only saw that the code can be copied, but he didn't know that the economic ecosystem cannot be copied. Just like you can copy Taobao's code and build an e-commerce website, but you can't attract buyers and sellers from Taobao. Even Ma Huateng can't do this.

Secondly, Wang Fuzhong believes that the number of Bitcoins is fixed, which will lead to deflation, and Wang believes that deflation is the cause of all previous economic crises. Deflation seems to be a scourge in the eyes of many economists, and there are also other scholars who believe that deflation is not a problem. But to refute Wang Fuzhong's judgment here, you only need to use gold to disprove it. Gold is a deflationary currency, but gold is still an international currency.

Wang believes that there is no support behind the Bitcoin economy. Wang simply imagines "economic support" as a concept like "country". For example, the US dollar is supported by the "country". In fact, the "support" of currency credit has never been the "country" as the main body, but by "individuals". The most fundamental reason why the US dollar has value is that there are many people who believe in and accept the US dollar. The economic support of Bitcoin is the people who believe in and accept Bitcoin.

Finally, Wang determined that Bitcoin is a speculative product, which is why it has the current price. "Speculation" is a very vague concept, and this concept is used as an important reason to refuse to recognize the intrinsic value of Bitcoin. The fundamental reason for the price of Bitcoin is the demand, and speculative demand is part of it, but not all of it. For example, if someone uses Bitcoin to buy something, this is not speculation.

Netizen asked: Many people around you invest in Bitcoin. What do you think of Bitcoin?

Mr. Hua: Strictly speaking, it is not called investing in Bitcoin, but speculating in Bitcoin, because Bitcoin does not generate any interest, nor does it generate any appreciation in real assets. Stocks are linked to companies. If the company's performance continues to grow, it will generate value, or you can buy financial products to generate actual cash flow returns. Bitcoin is a closed currency with many uncertain risks, policy factors, etc. It has no value to me. Of course, it is valuable to a small number of people who hold Bitcoin, but this value is not widely recognized, so there will be a sharp rise and fall. After a period of time, the time, place and people are right, and the number of speculators suddenly increases, it will produce sudden rises and falls. So I think it is not investing in Bitcoin, but speculating in Bitcoin, which is not very safe.

Learning experience: The concept of "speculation" is used to devalue Bitcoin again. But Mr. Hua's answer is more clear and complete than Wang Fuzhong's, and he clearly defines what he thinks speculation is. Mr. Hua believes that investments that do not generate interest, have no asset appreciation, and have no actual cash flow returns are called "speculation."

I think Mr.hua probably didn't take Bitcoin and its industry chain seriously, and he himself didn't study the concept of interest in depth. Interest is the increase in money brought by delaying the consumption of money in some way. For example, if you deposit money in a bank instead of spending it now, you can get interest. This kind of interest is the characteristic of inflationary currency, which is achieved through the difference between lending and depositing. Deflationary currency does not need to be loaned out to gain value, because the price of deflationary currency itself will gain value as the corresponding economy expands. In addition, Bitcoin can also be loaned out to earn interest.

The asset appreciation Mr. Hua mentioned also exists in the Bitcoin world. When Bitcoin was first invented, no one used it, and its corresponding assets were zero. But as more people accepted it, the corresponding assets increased. Now Bitcoin has been connected with hundreds of thousands of merchants. Mining farms with a total computing power of 1400P have also been established, as well as numerous exchanges, not to mention various startups. Isn't this asset appreciation in the Bitcoin world?

Does Bitcoin have no cash flow? As an investment product, Bitcoin has extremely high liquidity, far exceeding stocks. It is a trading system that runs 24 hours a day, 7 days a week. How can there be no cash flow!

Finally, Mr. Hua believes that Bitcoin is not widely recognized, which is indeed true. Currently, the number of people who recognize Bitcoin should be in the tens of millions. But this level is far higher than any stock in the A-share market. Perhaps it cannot be compared with the number of Apple shareholders.