The bubble is doomed to burst for several reasons. The first one is: because it is a bubble, no matter what chart, if it grows like the picture above, it will surely usher in the end of Lacrimosa at some point. But there is a deeper reason-Bitcoin is a strange mixture of goods and currency. The commodity value of bitcoin is generated by its monetary value, but as its commodity attributes become more and more significant, its use as a currency becomes less.
However, it is still valuable to study the bitcoin bubble more deeply, because it contains fascinating connotations for all those who care about payment, money or trust.
The best payment method ever
First, let's go back to Sunday night in June 1 1. On that day, the first large-scale bitcoin robbery occurred in history: such a simple and rude theft may even be regarded as a perfect crime. A man-we only know his name as "All in vain"-left his Windows computer on and connected to the Internet before going to bed that night. There are 25,000 electronic currencies in the digital wallet of this computer. When he woke up on Monday morning, his wallet was still there, but the money was gone.
At that time, the 25,000 bitcoins were worth about 500,000 dollars; Today, they are worth about $3.5 million. If he didn't notice it within a few minutes after the theft, he might keep the money. But he fell asleep-ten minutes after the theft, it became an irreversible fact. It is futile to get the money back unless the thief returns it.
No one can find the person who stole it for nothing. This is because Bitcoin was designed as a perfect anonymous payment method in the digital world by another mysterious netizen with an alias of "Satoshi Nakamoto". This is one of the characteristics of Bitcoin: once paid, it cannot be recovered. Similarly, if someone pays you bitcoin, you will undoubtedly become its owner. You don't need to know or trust the payer-you just need to know that the money has entered your virtual wallet, waiting to be saved or spent by you.
Bitcoin is designed-and in many ways has become-the perfect digital currency: no partial reserve system, anonymity and extremely high encryption security. For anyone who has suffered from the incompetence of the bank, or who is dissatisfied with the extra fees incurred when making payments at home and abroad-that is, all of us, Bitcoin may realize the ultimate vision of payment. What is particularly attractive is that for law enforcement and tax authorities, Bitcoin is essentially undetectable.
But these advantages are also weaknesses. No one wants to risk losing millions of dollars overnight just because a computer hacker is better than them.
But at present, bitcoin is still the best and cleanest payment method in many aspects. Therefore, if we want to create better substitutes, we must learn from the advantages of Bitcoin-but also learn from its disadvantages.
Bitcoin: analyzing features one by one
The source code of Bitcoin is open and public, which means that every hacker and decoder in the world can try to crack it. And they all came to the same conclusion: this algorithm is really reliable. People still have doubts about its anonymity and scalability, but when Bitcoin came out in early 2009-at the cusp of the global financial crisis-it immediately attracted a group of people with anarchist utopian ideals. These people are liberals in the high-tech industry, and they are promoting a lot of network innovation.
These people, including Satoshi Nakamoto, are by no means unique in their distrust of existing financial institutions. What makes Satoshi Nakamoto different is that he turned this distrust into a philosophical thought, which is the most important driving force behind the Bitcoin project. When Satoshi Nakamoto introduced Bitcoin to the world in February, 2009, he boasted that his new currency was "completely decentralized and had no trustworthy party". Moreover, he explained in great detail the problems that he thought needed to be solved urgently:
"The fundamental problem of traditional currency is the trust needed to make it work. We must trust the central bank not to devalue the currency, but the history of legal tender is full of betrayal of this trust. We must believe that banks will keep our money and transfer it electronically, but in the rising credit bubble, they still lend without reservation. We must entrust our privacy to them and believe that they will not let scammers take money from our accounts. "
Satoshi Nakamoto is not paranoid: what he said here has nothing to do with Warren? What Buffett said in his letter to shareholders on 20 12 is not much different.
"Under the existing monetary system, known investment types include money market funds, bonds, mortgages, bank savings and other ways. Most of these money-based investment methods are considered' safe'. In fact, they are among the most dangerous forms of assets.
"In the past century, these investment methods have destroyed the purchasing power of investors in many countries, although these investors can continue to reap the principal and interest in time. In addition, this terrible consequence will be repeated again and again. The government determines the final value of money, and systematic factors occasionally make the government biased towards policies that trigger inflation. Such a policy will get out of control from time to time.
"Even in the United States, a country that strongly appeals for currency stability, the dollar has depreciated by an astonishing 86% since I 1965 took over the management of Berkshire. What was available at $65,438+0 at that time is as high as $7 today. "
If you hold dollars, you should believe that the US government will not destroy your wealth. In contrast, Bitcoin is based on distrust-it is deliberately designed as a "everyone for himself" currency. All this is in vain, because his stupidity has been accused by many people in the bitcoin world: what does he think of storing e-wallets on networked Windows machines?
But even when using bitcoin, people eventually have to trust others-and the people they trust are often unreliable. My bitcoin was later discovered to be a scam; Mt Gox was attacked by hackers. At present, Coinlab is a popular emerging bitcoin company, but considering the benefits that hackers can bring to these companies and the fact that law enforcement agencies are not interested in such criminals, they are always at risk of losing their customers' property.
Zero trust
Distrust of Bitcoin is both a feature and a loophole-in fact, most of us are willing to outsource the task of hoarding wealth to a trusted large organization, instead of hiding 1 0,000 dollars under the black volcanic rock in the stone wall of an old oak tree, or wrapping a 100 dollar bill with aluminum foil paper and hiding it in the refrigerator. Managing Bitcoin by yourself is risky and requires high computer skills. However, the trust needed to entrust your own bitcoin to others is exactly what Bitcoin aims to avoid.
Bitcoin's inherent suspicion of financial institutions not only distinguishes it from legal tender, but also from other virtual currencies, such as Facebook coins in the United States, Q coins in China and Linden coins in Second Life, the world's largest virtual game. All these virtual currencies are under the strict supervision of the company that invented them, and they are almost worthless outside these specific economic systems.
Some of these virtual currencies are about the same order of magnitude as Bitcoin, although it is difficult to compare them in the same sense. For example, the annual income of Facebook coins is about 10 billion dollars. In 2007, the Q-coin market was so big that the People's Bank of China intervened and called on companies to stop trading in Q-coins. In the recent bubble, the daily transaction volume of Bitcoin once exceeded $30 million, and most of the time it was above $5 million. In this way, as long as the bubble does not burst, the annual transaction volume will be around 2 billion US dollars.