Bitcoin the Digital asset:
What is it like to ride a roller coaster without a seat belt? Just invest in Bitcoin. Since the second half of 2020, the price of Bitcoin has continued to rise, and at the end of the year ushered in a crazy bull market. On January 8, 2021, the price of Bitcoin exceeded $41,900. On the same day, Asset Dash data showed that the market value of Bitcoin exceeded Tesla. In 2009, the Bitcoin system was officially released. At that time, the price of a Bitcoin was only a few cents, and then it soared to several hundred, several thousand dollars, and tens of thousands of dollars. Based on the 2010 Bitcoin price of 0.0025 dollars per coin, ten The annual price increase has reached 13.8 million times. As of press time, the price of Bitcoin is around $30,000.
In this process, Bitcoin is sometimes a diamond, sometimes a bubble, and it rises and falls like a roller coaster. However, from an economic perspective, as the price of Bitcoin continues to rise, more and more people are beginning to explore the possibility of Bitcoin becoming "digital gold" and the next generation of reserve assets.
What is such a crazy Bitcoin?
In 2008, a person named Satoshi Nakamoto published a Bitcoin white paper that elaborated on the operating mechanism of Bitcoin. On January 3, 2009, the genesis block of the Bitcoin blockchain was dug up by Satoshi Nakamoto, and a block reward of 50 BTC was generated, marking the official advent of Bitcoin. Bitcoin is a kind of digital encrypted currency. It uses technical means to solve the problem of the subject of currency credit, and creates a democratic, transparent, but absolutely privacy-protected currency system in the virtual world, supports peer-to-peer transactions, and Let all nodes have the same right to know and verify. The biggest difference between Bitcoin and other virtual currencies is that its total number is limited, only 21 million, which is extremely scarce. It is precisely because of this scarcity that the acquisition of Bitcoin will become slower and more difficult. Unlike stock trading that we are familiar with, Bitcoin's trading method is 7*24 hours non-stop trading, and the price is constantly changing.
Neil Ferguson, the famous historian of "The Rise of Currency", believes that Bitcoin is the only digital asset or token with built-in scarcity. "Everything on the Internet is in excess, and Bitcoin is an exception." The reason why Bitcoin has risen so high is because of the limited amount. If everyone can dig out indefinitely instead of more than 21 million, the price of Bitcoin today will not be so high.
Source / Photo courtesy of respondents The main reason for Bitcoin's rise this year is that with the increase in recognition of Bitcoin, mainstream financial institutions in the United States, represented by Grayscale, are increasing their holdings. After traditional American financial institutions have purchased Bitcoin on a large scale, the US exchange Coinbase The accumulation of bitcoin assets has reached the world's first place, and retail investors have also picked up the car after seeing the skyrocketing market. Under the influence of the epidemic, the global financial market has fallen into a deep recession. In order to stabilize the market and the economy, the fiscal stimulus of central banks has been unprecedented in scale and global inflation. Expectations are rising, and the market's demand for anti-inflation assets has increased substantially. Compared with the sovereign currencies of countries around the world, Bitcoin will not be over issued or depreciated due to technical constraints. It has attracted the participation of many mainstream financial institutions around the world. The proportion of institutional investors is increasing day by day, and it has also brought massive amounts of capital into the market field expectations.
How to treat and invest rationally?
Decentralization, non-tampering, data traceability, and low transaction costs. The various characteristics of Bitcoin and the myth of "realizing the freedom of wealth through speculation" attract retail investors. In an interview with Barron’s, Neil Ferguson stated that if someone asked at the beginning of 2020, “The upcoming new crown pneumonia is extremely destructive to the world. Should I choose gold or Bitcoin as a safe haven asset?” It is definitely wise to choose Bitcoin, because gold's gain is only 21%, and Bitcoin's rate of return is an order of magnitude higher than gold.
Although in terms of price increase, Bitcoin has risen by 55.95% in the past January, 272.64% in the past June, and 306.53% in the past year, but not everyone who invests in Bitcoin can make a steady profit without losing. On January 11 this year, Bitcoin plummeted by 19% within 24 hours, and 200,000 people went out of stock of 13.7 billion. On the evening of January 21st, Bitcoin once fell more than 4,000$ to below 31,000$ per coin within a day, a drop of 12.5%. Within 24 hours, more than 5 billion yuan of funds were liquidated, and the number of liquidated positions reached 87,000.
Bitcoin investors should have a long-term philosophy, believing that Bitcoin is a tool to fight against the over issuance of the U.S. dollar. That is to say, long termism is needed. The price will always be bullish, but there will definitely be ups and downs in the short term, if you want to invest in Bitcoin, you must have long term views and long term investment confidence. If speculation goes up or down, it may be washed out, and it may even lead to losses. According to previous research, Bitcoin's short-term characteristics are rapid rise and fall, and its style is very different from the usual financial products that rise and fall slightly. If investors want to participate, they must consider their own risk tolerance. The risk warning of encrypted digital currency deserves high attention and serious treatment by ordinary investors.
According to the market quotations of Huobi Global, since the second half of 2020, the price of Bitcoin has continued to rise and ushered in a crazy bull market at the end of the year. On January 8, 2021, the price of Bitcoin has exceeded $41,900, but the market value only accounts for about 7% of gold. Xiang Songzuo said that to treat Bitcoin rationally, Bitcoin can be used as a safe-haven asset and as a supplement to gold. This is enough, and there is no need to exaggerate it to the point that it will replace gold and the US dollar.
How long can Bitcoin be "crazy"?
In 2021, the National Development and Reform Commission will incorporate blockchain technology into the new infrastructure as an information infrastructure in the new infrastructure. This also means that the standardization process of domestic blockchain technology will accelerate, and blockchain will be used in more scenarios, industries and Used in the industry.
Currently, the most important application of blockchain is digital currency. Although the technology of blockchain has existed for a long time, it was not until the rise of digital currency that it led to the development of the entire blockchain and made people understand the technology of blockchain. Blockchain is the underlying technology platform for digital currency applications, and the development of the two complement each other. In the entire history of digital currency development, Bitcoin again occupies an important position. I think Bitcoin is a miracle in the history of human currency and technological development.
Bitcoin has two important contributions: First, because of the price fluctuations of Bitcoin, it is often in the headlines of major media in the world. Many people, including some ordinary people, are beginning to pay attention to digital currency and let the concept of digital currency take root in the hearts of the people; the second is that Bitcoin has made a huge contribution to the invention and popularization of blockchain technology. "On these two contributions alone, the contributions of Bitcoin inventors and Bitcoin transaction participants are worthy of recognition." For example, in recent years, taken advantage of the industry to provide clues for the police to crack cases of money laundering and fraud using digital assets. It has also made many achievements in the industrial blockchain.
In terms of digital asset trading, as one of the world's three largest trading platforms, it is vigorously promoting the global development of its compliance business. Guosheng Securities Research Report pointed out that Bitcoin, as a fast growing asset, has both the characteristics of a commodity similar to gold and the hope of emerging blockchain technology similar to stock market Internet technology companies. Therefore, Bitcoin is entirely possible Get out of the independent market independent of commodities and stocks.
However, as an emerging asset, Bitcoin also has some risks, as institutions bring large amounts of funds into the market, and the further development of financial derivatives such as Bitcoin futures, the price of Bitcoin still has the risk of violent fluctuations; the regulatory level of various countries is becoming increasingly tight. The government's supervision and crackdown on anti money laundering, tax inspections, and legal currency transactions are also increasing.
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