Can Bitcoin Make a Comeback?

On August 25, 2015, the central bank announced the Frost Descent. From August 26, 2015, the benchmark lending rate for financial institutions for one year was lowered by 0.25 percentage points to 4.6%; the benchmark deposit rate for one year was lowered by 0.25 percentage points to 1.75%. From September 6, 2015, the reserve requirement ratio for RMB deposits of financial institutions was lowered by 0.5 percentage points.

Although the central bank claims that the purpose of this round of frost is to further reduce corporate financing costs, maintain reasonable liquidity in the banking system, and guide monetary credit to grow steadily and moderately. However, many people believe that this round of frost is actually a new round of rescue. Because the panic on the 24th of the previous day enveloped the global financial market. From Asia to America, major stock indexes fell sharply, and the stock indexes in the United States, Japan and Europe fell between 3.6% and 5.4%. The Shanghai Composite Index fell 8.49%, the largest single-day drop in 8 years, and the fourth largest drop since the establishment of the price limit system at the end of December 1996.

Another financial crisis?

Wall Street Journal and The New York Times published articles respectively titled "Seven-Year Curse: Will Global Financial Crisis Happen Every Seven Years?" and "Economists Warn that China's Financial Crisis is Inevitable." Imperialism is determined to destroy our great country.

Xinhua News Agency also published a commentary titled "The Asian Financial Crisis Will Not Happen Again", stating that there was no systemic risk in the financial market, the extent and span of currency depreciation was not large, and the stock market had not collapsed.

In fact, such disputes often accompany us. As long as there is a slight disturbance, someone will stand up and say that this is a precursor to a crisis, while others disagree. Because there are two types of experts in the economics circle, one is the crisis faction, who will be bearish on any slight disturbance; the other is the optimist, who will never admit that there will be a crisis until the crisis really comes. So, sometimes the crisis experts guessed right and the financial crisis really came; sometimes the optimist experts guessed right and the financial crisis did not come. As a result, the experts are busy signing and selling books, and as ordinary people, we still don’t know who to listen to.

But whether we understand economics or not, there are two things we can be almost certain of:

1. Financial crises will come sooner or later. Looking back over the past few decades, we can see the stock market crashes in 1973, 1987, and 2001, the bond market crisis in 1994, the Asian financial crisis in 1997, and the subprime mortgage crisis in 2007. Although financial crises are not as punctual as menstruation, they will come sooner or later. Under the premise that there are no major changes in the global financial system and structure, what will happen even if we avoid it today? What will we do tomorrow?

2. The crisis of trust has arrived. The public's trust in the government has reached its lowest point. The government vowed to stabilize housing prices, but housing prices are still rising. The government vowed to save the stock market, but the stock market plummeted. This public distrust of the government will seriously affect the implementation of government policies. According to this trend, no matter what policies are introduced in the future, the public will think that it is useless. More importantly, trust is one of the most important cornerstones of finance. The consequence of overdrawing trust is bound to brew a greater crisis.

Bitcoin: Born in crisis

If we were to use a sentence to summarize Satoshi Nakamoto’s original intention of inventing Bitcoin, many of us would think of the sentence he wrote on the Genesis Block: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”. This sentence was the title of the front-page article of the Times that day, which means: The Chancellor of the Exchequer carried out a second round of bailout for banks.

After the subprime mortgage crisis, countries all took measures to rescue the market. Satoshi Nakamoto wrote this sentence, which is full of ridicule and disgust for the existing financial system. The existing financial system has been in crisis over and over again, and has repeatedly relied on printing money to rescue the market. After each crisis, we will find that the people who created the crisis not only did not receive any punishment, but also lived a comfortable life. Innocent people, although they did nothing wrong, have to bear the consequences. The money spent by the government to rescue the market is either printed or taxed, in short, it is paid by all the people.

When Satoshi Nakamoto wrote this, he was full of confidence. He obviously believed that Bitcoin could subvert the entire financial field, and he had already made history. This is why he would always remain anonymous, because he firmly believed that Bitcoin would succeed, and using his real name would only cause trouble for himself.

Will Bitcoin really succeed? We don’t know. However, it provides a new solution to the financial crisis. At present, more and more people are accepting it. It may not succeed in the end, but there is no sign of failure.

Patience: Don’t jump to conclusions

A few days ago, Luo Yonghao gave an example when he released the Nut phone. Sliced ​​bread was called "the greatest progress in the baking industry since bread was wrapped". However, it was not until more than 10 years after it was invented that it was gradually accepted by the public. Bakers believed that customers would not care whether the bread was sliced ​​or not, and skeptics even worried that sliced ​​bread would go bad faster, and even the whole slice of bread would turn directly into crumbs. This story shows that even if you do the right thing, you still need time and wait for the public to accept it.

In the same way, when the stock market plummeted a few days ago, Bitcoin also plummeted. Therefore, some people concluded that Bitcoin's hedging function does not exist at all. This is unconvincing because everyone can choose a specific time span to get their favorite conclusion. For example, some people believe that Bitcoin is a bad currency based on its poor performance in the past two years. Others believe that Bitcoin is one of the most valuable assets in the world based on its excellent performance in the past six years. I think there is no need to argue about this, because only time can judge it in the end. Whether it is criticized or praised, patience is needed.

Support Bitcoin?

Everyone who supports Bitcoin may have different reasons. Some people think it is cool, some people think it is easy to use, and the reason I support it is the same as Satoshi Nakamoto's - disgust with the existing financial system. Every time there is a financial crisis, we are inexplicably the final payer, which is really a bit infuriating and helpless. When Bitcoin appeared in front of me, I chose to support it without hesitation. This experiment may not necessarily succeed, but it must be carried out. Even if it can force the reform of the financial system, it is worth it.

In the eyes of others, it takes courage to support Bitcoin, because it is at risk of failure and zeroing out at any time. In my opinion, it does not take courage to support Bitcoin, because the money will be robbed sooner or later if it is placed in legal currency, but this kind of robbing is more hidden and you may not be able to detect it. Therefore, I have never regarded Bitcoin as an investment or speculation. I hoard Bitcoin and give it value simply because I hope this experiment can continue. If no one is willing to give it value, the experiment has failed. In the face of problems, there is always someone who needs to promote solutions and someone who has to take risks. If everyone chooses to silently endure unfair treatment, the world will never become a better place.