Is there a bubble in bitcoin prices?

1.

now bitcoin bubble serious, may collapse, the market needs to be cautious. But unlike tulip, it will rise slowly after falling, rather than collapse

because the total amount of bitcoin is limited. mining costs are getting higher and higher. It can also be preserved for a long time at a low cost. At the same time, about 40% of bitcoin is in the hands of a very small number of people, which can achieve high control

you need to judge its future & quot; Collection value & quot; Up or down

what you should pay attention to is its & lt; Collection value & quot; It does not depend on itself, but on the public's enthusiasm for it and its general recognition. It's changing all the time

from the perspective of coin holders, the more people they buy, the better. This will lead to the & lt; decline of bitcoin; Collection value & quot; Up

there are many coin holders who strongly advocate bitcoin and turn shit into gold. With the success of advocacy, more and more people buy money. Excrement really becomes gold. Advocacy is no longer advocacy, but truth. This paradox is also what Soros said; Reflexivity Principle & quot; It's the embodiment of the idea. This is also the most painful and unacceptable thing for rational people who do not speculate

at present, I personally feel that the price is too high. There are too many speculators in the short term. There are some bubbles. Investment should be cautious. You can buy some in the next slump and collect them for a long time

you should not believe the following two statements:

1. Bitcoin is the perfect currency in circulation in the future. It has high use value, so it is very valuable

2. Bitcoin is deceptive and has no use value, so it is not valuable

one answer is that bitcoin is like a diamond. It does

diamond's & lt; Use value & quot Love is eternal), which was hyped by De Beers in the last century. Until then, diamonds were not worth money. And the total supply of diamonds is monopolized and controlled by giants such as De Beers Is "diamond" the most wonderful marketing scam in the world in the 20th century? Is it really worthless? There are many good answers to this question.)

De Beers constantly claims that diamonds are the strongest objects and can symbolize eternity. People graally accepted it

and Nakamoto develops bitcoin, and believes that its decentralization, blockchain technology and other characteristics are suitable for the future as a perfect e-currency (the initial title of the paper is "a peer-to-peer e-cash system"). With the expansion and publicity of bitcoin's followers, more and more people have accepted this idea. But now there are still a large number of people who don't know anything and feel that the price is rising sharply, so they buy bitcoin. After buying it, reverse rationalize it and persuade yourself to accept the concept that bitcoin is a perfect electronic currency

this is & lt; The community of imagination; The process of formation. The essence is similar. It doesn't matter whether these concepts are true or not. It's important: how many people do you trust. If more people believe in it, it will come true

In the end, diamond has become an extremely successful marketing case. The symbolic meaning of diamonds has been formed all over the world; The community of imagination;. Instead of collapsing like tulip, it has become a sustainable instry

from the current trend, bitcoin is working in this direction. There is a public opinion game between advocates and bearers to see who has more power to influence the huge group of passers-by to identify or not to identify with bitcoin. Both sides exaggerate, saying that bitcoin is the Holy Grail of changing human society and that bitcoin is a Ponzi scheme. At present, because of the continuous rise (and it has doubled after several sharp falls), the advocates have the upper hand

2.

But today's bitcoin market is so hot and the price is rising so fast. It is also because bitcoin investors and holders do a lot of business through high-frequency trading. In fact, it does not reflect the real demand of the market. So if we continue, one day we will realize that our actions are not creating value, but transferring funds, and then the market will burst

therefore, many investors are still cautious in choosing bitcoin. After all, bitcoin is a virtual currency. If one day the state intervenes to strengthen supervision, investors are likely to pay a high price. Before investing, they should carefully consider the risks and their own tolerance, and invest rationally

3. As for the impact of various events on the price of bitcoin, there are four types of such events
political events: most of these events involve the government's attitude towards bitcoin, such as the Federal Reserve's recognition of bitcoin as a financial instrument, Germany's recognition of bitcoin as a currency, China's prohibition of financial institutions from participating in bitcoin trading, and Russia's prohibition of using bitcoin and participating in bitcoin mining. Although bitcoin itself is a neutral technology, it is not affected by politics, but the price of bitcoin will fluctuate dramatically because of such events. So far, this is the biggest factor affecting the price of bitcoin
exchange events: Although bitcoin is a decentralized currency, bitcoin transactions mainly take place in centralized exchanges. Since the birth of bitcoin, many exchanges have been stolen. For example, mtgox, the largest Japanese exchange, lost 700000 bitcoins. Recently, bitfinex, the Hong Kong exchange, lost 120000 bitcoins. Bitstamp, the Slovenian exchange, was attacked and lost 19000 bitcoins. Whenever such an event occurs, the risk of bitcoin trading increases sharply, and bitcoin will often usher in a larger decline
financial events: such events often come from the instability of the real financial world, such as the default of the Central Bank of Cyprus, which leads to zero savings of more than 100000 euros of the country's depositors, serious devaluation of Ukraine's currency under the pressure of war, and brexit of the UK, which weakens the stability of the euro area. Bitcoin, as a safe haven asset, is gaining more and more market recognition. At present, the trading volume of bitcoin in the world has exceeded that of gold ETF, and the instability of fiat money has caused the continuous rise of bitcoin
Technical events: as a decentralized open source network protocol, bitcoin's code is far from perfect. There have been several crises in bitcoin's protocol. For example, a certain upgrade of bitcoin protocol has not been unanimously recognized by the whole network. In the end, there is a double flower problem. The scalability of bitcoin's transaction makes it easy for hackers to attack and steal, At one time, it forced several bitcoin exchanges to suspend trading. Recently, there has been a heated debate about expansion in the bitcoin community, and no effective solution has been available, which has cast a shadow on the future of bitcoin. Whether the bitcoin protocol can continue to evolve is a long-term impact on the price of bitcoin.

4.

Not long ago, the total value of bitcoin in the world exceeded one billion US dollars for the first time. For a pure virtual currency without the support of a central bank or other authority, this is a remarkable achievement. But this is also temporary: we are experiencing a bitcoin bubble, and the bursting of bubbles is only a matter of time. P>

says bubbles are doomed to break down for several reasons. The first is: because it is a bubble, no matter what charts, if it grows into the above picture, it will usher in tears at the end of a certain moment. but there is a deeper reason - bitcoin is a strange mixture of goods and money. The commodity value of bitcoin is generated by its monetary value, but as its commodity attribute becomes more and more significant, its use as currency becomes smaller

the distrust of existing financial institutions by these people, including Nakamoto, is no exception. What makes Nakamoto different is that he turns this distrust into a philosophy, which is the most important driving force behind the bitcoin project. When he introced bitcoin to the world in February 2009, Nakamoto boasted that his new currency had achieved "complete decentralization and there was no credible party". Moreover, he explained in great detail the problems that he thought should 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 fiat money is full of betrayal of this trust. We have to trust that banks will save our money and transfer them electronically, but they still lend money without reservation in the rising credit bubble. We have to trust them with our privacy and trust them not to let impostors take money out of our accounts. "

Nakamoto is not paranoid: what he said here is the same as Warren; What Mr. Buffett said in his letter to shareholders in 2012 doesn't make much difference

" under the current monetary system, known investment types include money market funds, bonds, mortgage loans, bank savings, and other forms. Most of these money based investments are considered "safe.". In fact, they are among the most dangerous assets

"in the past century, these investment methods have destroyed the purchasing power of investors in many countries, even if they can continue to harvest principal and interest in a timely manner. In addition, this terrible consequence will reappear again and again. Governments determine the final value of money, and systemic factors occasionally bias them toward policies that trigger inflation. From time to time, such policies get out of control

"even in the United States, which strongly appeals for currency stability, the depreciation of the US dollar since I took over the management of Berkshire in 1965 has reached an alarming 86%. What you could buy for a dollar back then costs as much as seven dollars today. "

if you hold dollars, you have to trust the US government not to destroy your wealth. By contrast, bitcoin is built on distrust - it's designed to be a "everyone for himself" currency. In vain, because of his stupidity, he was criticized by many people in the bitcoin world: what did he think of storing his e-wallet on an Internet connected windows machine

but even when using bitcoin, people have to trust others in the end - and the objects they trust often turn out to be unreliable

zero trust

this degree of distrust is not only a feature but also a loophole compared with the special coin - in fact, most of us are willing to outsource the task of hoarding wealth to a large trusted organization, rather than hiding $1000 under the black volcanic rock in the stone wall of the old oak root, Or a $90000 100 dollar bill wrapped in aluminum foil and hidden in the refrigerator. Managing bitcoin yourself is risky and requires high computer skills. But the trust needed to entrust one's 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 makes it different from other virtual currencies, such as Facebook coin in the United States, Q coin in China and linden coin in the world's largest virtual game second life. All of these virtual currencies are closely monitored by the company that invented them, and are of little value outside these particular economies

some of these virtual currencies are about the same order of magnitude as bitcoin in scale, although it is difficult to compare them in the same sense for example, the annual revenue of Facebook coin is about one billion US dollars, and the market of Q coin in 2007 was so big that the people's Bank of China intervened and called on companies to stop trading with Q coin. In the recent bubble, bitcoins traded for more than $30 million a day, and most of the time they traded more than $5 million a day. The annual turnover will be about $2 billion, so long as the bubble will not burst. strong>