Author: LiamWang, Twitter
Just a few days ago, the price of Bitcoin exceeded $70,000 and reached an all-time high. Since Satoshi Nakamoto released the Bitcoin white paper in 2008, the development of Bitcoin has gone through 16 years. In the past 16 years, Bitcoin has gone from being believed by no one to slowly being accepted by the public, from being worthless to hitting record highs, which very typically reflects the tortuous and upward development path of a new thing.
There is no doubt that the rise in Bitcoin prices has brought about huge investment/speculation opportunities. Whether you are a long-termist, a speculator or a bystander, you are inevitably enveloped in a huge FOMO mood, and everyone is keen to discuss the next high point of Bitcoin: $80,000, $100,000, $150,000 Even $200,000... Although the answers given are different, they are surprisingly consistent in their expectations of continuing to rise.
In my opinion, high sentiment helps to help Bitcoin form a broader consensus base. But the more we are in this atmosphere, the more we should withdraw from it, and it is necessary to look back at the birth and development of Bitcoin.
On October 31, 2008, a person named Satoshi Nakamoto published a paper called "Bitcoin: A Peer-toPeer Electronic Cash System". In this paper, Satoshi Nakamoto elaborated on the feasibility of electronic currency based on timestamps and proof-of-work.
Of course, many people will ask, why would Satoshi Nakamoto publish such a paper? To answer this question, we have to look back to the world in 2008 In the end what happened.
On September 15, 2008, Lehman Brothers, a large American financial company, went bankrupt, triggering a global financial crisis.
In response to the crisis, the U.S. government launched a large-scale rescue operation for the domestic financial system. The Federal Reserve started the money printing press and adopted a quantitative easing policy to release a large amount of water, seriously damaging the stability of the global financial system. That year, whether in New York, London, Tokyo, or Hong Kong, every financial practitioner felt at risk and worried about whether they would lose their job tomorrow; the Wall Street Journal, Bloomberg, the New York Times, the Financial Times and other globally influential media The issue of what to do is discussed every day on almost every page; every large-scale event in the world discusses only one theme, that is, how to rescue the market. In short, that year, global finance was in a whirlwind, and everyone was shrouded in the shadow of economic recession.
The systemic collapse of financial intermediaries and the self-resultation of evil motives, coupled with the inflation and exchange rate instability caused by the over-issuance of currencies by sovereign countries, and even global bailouts Problems such as slow action all reflect the inherent fragility and shortcomings of traditional financial and global monetary systems. It was in this context that Bitcoin came into being
On January 3, 2009, with the official launch of the Bitcoin system, Satoshi Nakamoto After mining the genesis block of Bitcoin (block number 0), the Bitcoin network was officially born, and he himself received a reward of 50 Bitcoins. Interestingly, there is a message written in this block:
"The Times 03/Jan/2009Chancellor on brink of second bailout forbanks"
https://en.bitcoin.it/wiki/Genesis block
2010 On May 22, 2018, Laszlo Hanvecz, a programmer living in Florida, suddenly decided to try to use his Bitcoin to buy some real things. In the end, he used 10,000 Bitcoins. The Bitcoins were exchanged for two pizzas delivered from a local pizzeria in Florida. This is the first time that Bitcoin has exchange value, and May 22 is therefore called "Bitcoin PizzaDay" by crypto enthusiasts
On November 28, 2012, Bitcoin ushered in its first halving in history. On that day, the price of Bitcoin was approximately US$12 per coin. Six months later, on May 28, 2013, the price of Bitcoin rose to US$130 per coin.
On July 9, 2016, Bitcoin began its second halving in history. On that day, the price of Bitcoin was approximately US$660 per coin. By January 9, 2017, the price of Bitcoin reached US$900 per coin.
On May 11, 2020, Bitcoin experienced the third halving in history. On that day, the price of Bitcoin was almost US$8,600 per coin. Six months later, on November 11, 2020, the price of Bitcoin rose to US$15,700 per coin.
The magic of Bitcoin is not over yet. On June 9, 2021, the El Salvador Congress passed a bill approving Bitcoin as the country’s legal tender. For the first time in history, Bitcoin has been officially accepted by a sovereign country.
On January 21, 2023, Bitcoin developer Casey Rodarmor launched the Ordinals protocol, and inscription opportunities emerged in large numbers. Bitcoin The currency has ushered in a historic moment to create an ecosystem.
On January 10, 2024, the U.S. Securities and Exchange Commission (SEC) approved 11 Bitcoin spot ETFs, which means retail and institutional investment in the financial market Anyone can purchase Bitcoin to enrich their diversified investment portfolio, thus becoming an epoch-making milestone in the history of Bitcoin.
Looking at the development history of Bitcoin, if a new thing wants to become an asset worth investing in, continuous establishment and consolidation of consensus are inevitable conditions, but more importantly, it has many accidents and The "perfect" integration of inevitable factors: ① A special era background or an opportunity related to systemic changes in human society; ② Showing scarcity, 21 million Bitcoins determine that its supply is not unlimited; ③ Innovative But it has a mysterious attribute. No one knows who Satoshi Nakamoto is now; ④ Uniqueness, no one will deny that Bitcoin is the first product to demonstrate the decentralized spirit of the blockchain.
It is the "perfect" integration of these multiple accidental and inevitable factors that creates the difference of Bitcoin and gives it its unique value.
As for the value of Bitcoin, the most widespread consensus is that it is regarded as "digital gold", which means that Bitcoin is a digital currency just like gold. A very good hedge against inflation.
This analogy seems reasonable, after all, the two have many similarities in characteristics. The most obvious are two points: ① The supply of both is limited; ② Both can be used as substitutes for legal tender.
Following this logic, let us take a look at the gap between the current market values of the two. According to companiesmarketcap, as of March 12, 2024, the market value of gold is US$14 trillion, and the market value of Bitcoin is approximately US$1.4 trillion. From this perspective, Bitcoin still has room for at least tenfold growth. This logic seems to many to be a strong argument to support the continued rise in Bitcoin prices.
If you look at the extended period, take the ten years from 2013 to 2023 as an example, as shown in the figure below, except for 2014, 2018 and 2022 , Bitcoin’s overall return rate far outperforms assets such as gold and the S&P 500 Index. It also once again demonstrates the superiority of Bitcoin in terms of investment appreciation and resistance to inflation.
https://www.visualcapitalist.com/bitcoin-returns-vs-major-asset-classes/
The role of "digital gold" with low market capitalization has brought considerable room for growth to Bitcoin. But in my opinion, it is far from enough to understand Bitcoin purely from the perspective of “digital gold”. In other words, I believe that Bitcoin is far more than just "digital gold". Its imagination is higher than that of gold. There are two main views:
1. Gold is currency, but Bitcoin is currency + technology ecosystem. Since currency appeared in human society, it has mainly carried three functions: ① value storage; ② value measurement; ③ medium of exchange. From a monetary perspective, there is no doubt that both Bitcoin and gold have such capabilities. But the advantage of Bitcoin over gold is that Bitcoin not only has the properties of currency, but also a new technological innovation. This is incomparable to gold.
Because of its technical attributes, the blockchain represented by Bitcoin has more flexible scalability and is easier to derive and develop a technological ecosystem. Today, with the emergence of new things such as inscriptions, the Bitcoin ecosystem has begun to rise rapidly. Although it is uncertain what the Bitcoin ecosystem will look like in the future, it is certain that the technical attributes of Bitcoin combined with its monetary attributes will bring greater room for imagination.
2. Gold is prepared for human society, while Bitcoin is prepared for new intelligent human society. The so-called human society includes different social forms such as slave society, feudal society, and capitalist society. In these forms, gold has been with us for thousands of years.
In my opinion, the understanding of new intelligent human society is a completely different social form that will be created by future humans through more powerful intelligence. :
①Interstellar society: We are no longer just people on earth, but will become people in the universe. Musk’s plan to colonize Mars already shows that some adventurists in the human species are making strides in this direction.
②AI human society: Yes, I am not talking about humans + AI, but AI humans. This means that people will not only coexist with the AI they create, but they themselves will also have some kind of AI function. If a chip is implanted into the human brain, everything is possible, right? Similarly, OpenAI has shown us AI We have also heard too many new terms about virtual society: metaverse, digital people, virtual avatars... In the process of promoting the transition from real society to virtual society, human beings have never stopped exploring. .
Whether it is an interstellar society or an AI human society, a social and economic system will need to be established, and currency will also need to serve as a medium for value storage, value measurement, and value exchange. . At least for now, no other item is more suitable than Bitcoin. Of course, as many people are worried, as quantum computing becomes more mature, perhaps one day, the Bitcoin code will be cracked and no longer has the attribute of scarcity. Some people will also question that if humans immigrate to Mars one day in the future, gold-like items will be found on it. Bitcoin is not the final option.
No one can predict what the future will be like. In the long river of history, every new thing is actually a social experiment of major changes in human society, but standing still Looking at the future now, Bitcoin, after 16 years of development, is far from over.
Since the birth of the Bitcoin genesis block in 2009, early participants in Bitcoin have received generous returns. When you prove that you have made money on Bitcoin, you either prove that your knowledge is deep enough or you are lucky enough. With the recognition of Bitcoin spot ETF in January 2024, I believe that Bitcoin has stood at a new starting point. From this starting point, my judgment is:
① The role of Bitcoin as a safe-haven asset is becoming increasingly stronger, and the overall bargaining chip will also become stronger. The more concentrated it is in the hands of institutions and large investors, retail investors’ demand for investment in Bitcoin will be stimulated but new supply will need to be provided.
②The attributes of the Bitcoin technology ecosystem have just begun to appear. Both long-termists and investors/speculators will intentionally or unintentionally create and explore new Alpha opportunities. The emergence of the inscription can be said to be an attempt. The reason why I use the word try is because I don’t know whether the inscription is the correct answer or if there are other possibilities. But if one day you make money on Bitcoin, it’s still the same sentence, either it proves that your knowledge is deep enough, or it proves that you are lucky enough.
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