2. The difference between the bitcoin standard and the bitcoin dollar standard

—— answers to the concepts in the article “Invite Satoshi Nakamoto to Welcome the New World”

Everyone is most concerned about whether Satoshi Nakamoto should come out, and the simple answer is that he should not come out. This answer is wrong. If you don’t explain this concept thoroughly, We can’t understand that the requirements of Bitcoin’s first and second half are entirely different.

To clarify this issue, we must start with some basic concepts.

First, Bitcoin is similar to gold. Gold grows naturally. Gold loses to a fiat currency because no one speaks and endorses it, no one works around gold to make gold have the effect of currency ruler, and no interest group benefits from it.

Modern finance is all about the theory and practice of fiat currency. Fiat currencies are extremely powerful. They have the endorsement of the government, interest groups, and almost all financial-related massive application scenarios. We are being brainwashed all the time, and we have taken the existence of fiat currency for granted. Must acknowledge Brainwashing has an effect; we’ve stopped asking fiat why because it was born that way.

No one can escape from the information cocoon. The result is, just a good thing sells well? Does gold necessarily shine? Maybe when the gold shines, we’re all buried. If Bitcoin Succeeds, Does Gold Have a Chance to Shine? Doesn’t Bitcoin face as much competition as gold and get kicked out like gold? Ethereum almost did it. The current fiat currency occupies the stage; will it naturally withdraw from the stage of history?

How do you let fiat currencies out? Will there be pie in the sky? We are all as invisible as Satoshi Nakamoto, and Bitcoin naturally rises. What are you thinking? Do your Spring and Autumn Dreams! If bitcoin goes up, it should go up already, and There is a reason for not meeting expectations. Does anybody analyze why? I have carefully studied the opinions of some so-called Bitcoin bigwigs, and in one sentence, Thay not woken up from the Spring and Autumn Dream. To sum it up: In addition to knowing some technology and a little innovation, one does not understand the product, the other does not understand the market, the third does not understand the competition, and the fourth does not understand the user. Thanks Satoshi Nakamoto bring for us  a good fate,

If they really understand, why has Satoshi Nakamoto not shown up? If they really understand, bitcoin will not be at its current price. If they really understand it, there will be no problems I mentioned below.

The market is made by people; who will make the market for Bitcoin?

Natural development is the principle of the era without competition. Fiat currency beats gold, It is too much to say that bad money drives out good money, but the defects of gold itself have become the target of opponents’ attacks. Who defends gold when it is under attack? We have seen the horror of dimensionality reduction; the scattered soldiers could not beat the regular army. Natural development is the fundamental law of social development, but natural development is the history of human struggle. Natural development is not non-development. Should Bitcoin develop? of course, yes. Don’t think that the subsequent development is technological innovation and payment. It must be emphasized that in the second half of Bitcoin, the importance of technicians is almost zero because Bitcoin technology is mature enough. Any minor changes must be very cautious.

Compared with gold, Bitcoin has a competitive advantage compared with fiat currency, is there any? From the perspective of world-class products, 12 years has basically completed the growth period and entered the mature period. Computers and mobile phones are far more complicated than Bitcoin. 2-3 years of replacement, about 10 years of rapid growth, and this is the law. Bitcoin was born, stipulating that the 0.1 scheme should not be changed. It is the wisdom of Bitcoin. But without any technological upgrading, how can it grow at high speed? It is a very worthy question. A mature world-class internet product must have no less than 1 billion users. This goal can be achieved as an excellent Internet product in 7-8 years. Bitcoin is an excellent product but has performed poorly from a market perspective. Once the growth of users cannot maintain exponential growth and reach more than 1 billion, there will be a bottleneck in the growth of prices, which will make people confused and begin to doubt the beliefs of the early years, which may cause the collapse of beliefs. It is a market problem. The problem of PlanB’s forecast because that users cannot grow exponentially. The current belief is supported by Satoshi Nakamoto silently. If he sells, it means that the price has reached its peak, and the market will plummet. If you sail against the current, you will retreat if you don’t advance. The fourth cycle is the inflection point cycle of Bitcoin. When it is not up, it will fall.

Do beliefs evolve naturally? Doesn’t a man make up God and communism?

There is a belief in the coin circle called 1 BTC = 1 BTC, Which means bitcoin standard. It is the correct nonsense of a Spring and Autumn Dreamer. Because this is like communism, there is no good path to realization. I want to talk about this issue because today, the bigwigs in the coin circle are still talking about it, and they are not making any progress at all. They represent the coin circle. When the dragon chair sits down a pig, the pig only is to eat and waits to die. How to create a path to realize faith?

1 BTC = 1 BTC has been practiced in the earliest coin circle, and we have trading pairs such as BTC and EHT. All coins are compared to the value of BTC or Ethereum, using them as the standard. It is the point of view of the fundamentalists of the BTC standard. The mushrooming innovations of the blockchain were basically concentrated before 2014. After that, only one innovation can be called a great innovation: stablecoin. Of course, a stablecoin is an application innovation, and it is not bad to have Defi and NFT innovations later, but they are just reefs in the river. People crossing the river touch it, stand on it, and then fall after walking forward. Because they are not perfect, not a mature solution, only the stablecoin did not fall and stood still.

Stablecoins are the value ruler of the coin circle, replacing the unreasonable transaction functions of Bitcoin and Ethereum, and the market inevitably welcomes them. The stablecoin is the M1 of the coin circle and now has a total market value of about 150 billion. Compared with fiat currency, the global fiat currency M1 has 700,000-80 trillion USD, and M2 has more than 300 trillion. That is, the multiplier V of fiat currency is about 4 times. The currency circulation efficiency of the blockchain is higher than that of the fiat currency, and the multiplier should be higher. But now, the entire market value of the coin circle is more than 400 billion, which is less than 4 times, and it is not even as good as the fiat currency. How does it represent the improvement of efficiency? How to replace fiat currency without progress? It is what’s wrong with the coin circle. The entire financial market is more than 300 trillion, and the share of the coin circle is less than 1%, not even a fraction. It will be different if it reaches 30 trillion USD, and the effect and prospect of substitution will come out. To achieve this goal, only Bitcoin can afford it. Undertake is conditional. First of all, the coin circle must emancipate the mind. The minds of the coin circle leaders are rigid, and it may take a lot of articles to have some effect.

It should be pointed out that asset currency and credit currency are two sets of financial systems, and the stablecoin of the blockchain has proved that asset currency is superior to credit currency. Asset currency is also the highest level of credit currency. The credit of credit currency depends on the assets behind it. Assets depend on how they are formed, and the value of an asset depends on its scarcity, which represents the difficulty of value conversion. The value of Bitcoin is converted from electricity. Electricity is purchased with money, and the chain is interlocking. Using Bitcoin as an endorsement and stablecoins as a ruler of value forms the prototype of the Bitcoin dollar standard. Strictly speaking, the two systems cannot be directly compared. The asset currency system is far simpler and more scientific than the credit currency system. The blockchain does not have a Nobel Prize, nor does it cost taxpayers money, but it has formed the prototype of the asset currency system, including theory, which is very worthy of respect and research.

The early practice of the Bitcoin standard showed too much volatility, and competition determined that people had to look for a trading medium with less volatility and sufficient credit to replace it. Stablecoins are anchored to the U.S. dollar and have the stability of the U.S. dollar, which is obviously far less than the volatility of Bitcoin. Still, the asset characteristics of Bitcoin far exceed those of fiat currency. The combination of the two will increase the asset hardness of the dollar.

With the emergence of stablecoins, Bitcoin, like gold, has become a high-quality asset that can be realized. Comparing Bitcoin with gold, the two compete. Gold has a market value of 11 trillion; can Bitcoin eat the gold market? Impossible. Even if all of it is eaten, it will be 11 trillion, and there will be an increase of more than 20 times. If half of the market is eaten, there will be an increase of more than 10 times. Will it be realized in the year of the monkey or the month of the horse? Compared with stocks, the certainty of rising is low, so it is not attractive, and mainstream investors look down on it. How can a market value of 5 trillion be used as the Bitcoin standard? According to Hal Finney, one of the founders of Bitcoin’s thought, Bitcoin is equivalent to the world’s total wealth. Reasonably speaking, it must be at least equal to the global currency M1. Obviously, we cannot see the realistic development path of Bitcoin. The article “Invite Satoshi Nakamoto” gives the development path of Bitcoin. Readers can refer to chapters 10-13.

Only when the market value of Bitcoin reaches 20 trillion can it be stabilized to the volatility of the U.S. dollar. The issue with U.S. dollars is that the price is constant, and the quantity is variable. And the issuance of Bitcoin is a fixed quantity and a variable price. Volatility and payment are a paradox, and payment requires stability. Rise is volatility, and if the problem of volatility is not solved, there is no solution to this problem. Stablecoins are the solution to this problem. Stablecoins are the M1 of the blockchain ecosystem. If stablecoins and Bitcoin are combined, it is possible to form the M1 of the global financial ecosystem. It is the thinking principle of the Bitcoin dollar standard scheme I proposed in Chapter 12. The great practice of the blockchain allows us to see the hope of solving the defects of fiat currency.

Bitcoin standard is the ultimate goal like communism; ideas are not reality. The path to achieving this is the Bitcoin dollar standard. People still dreaming of the Bitcoin standard in the coin circle should wake up; everything is zero without a path. Due to the existence of competition, in addition to the Bitcoin dollar standard, there may be a Bitcoin Euro standard and a Bitcoin Hong Kong dollar standard. Because there are many intelligent people in the world, in terms of conditions, as mentioned above, both the euro and the renminbi have opportunities. The Hong Kong dollar has the most excellent chance Because HKD and the dollar are now anchored. The central bank CBDC is a digital currency issued by the central bank. CBDC should be issued as an asset currency, not a digital currency like fiat currency. That is just the digitization of fiat currency without any innovative significance.

In short, the Bitcoin standard is the ultimate goal, and the Bitcoin dollar standard is a phased goal. Hence, it is called the Bitcoin dollar standard, which is not as smooth as the Bitcoin standard.

Bitcoin has great potential, but someone needs to do the work from theory to practice. At any rate, Bitcoin has tens of millions of people and a suitable mechanism that can compete with any force. How to compete? Let me explain later. In Chapter 8 of the article “Inviting Satoshi Nakamoto to Welcome the New World,” I talked about the stored value of Bitcoin but was limited to the topic; I did not dwell too much on it. Why it is said that stored value is the most suitable application for Bitcoin, we will talk about it later.

The words in the article are relatively sharp; welcome to argue with the dissatisfied bigwigs in the coin circle. Talk about their path to the Bitcoin standard, and they can also criticize me. After so many years, they haven’t let out a loud fart, which shows that they didn’t expect it. They can also talk about why Satoshi Nakamoto couldn’t come out and maybe can argue.

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