Q&A series on basic concepts of Bitcoin (Part 2)

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

6. The price of bitcoin is determined by demand

7. Bitcoin is scarcer than gold

8. Bitcoin should anchor economic development

9. Bitcoin has no price ceiling; imagination creates demand

10. 24-hour trading, quick response to economic risks

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6. The price of bitcoin is determined by demand

Bitcoin is a commodity. The demand determines the rise and fall of the price, and the use generates the demand. When there are more uses, the demand will be more significant, and the price will rise when the supply remains unchanged.

The use of gold has industrial uses, such as the gold-plated connectors do not rust. However, the purpose of jewelry is more to show nobility. Note that the concept of nobility includes the scarcity of gold. The central bank uses gold to hedge the inflation risk of fiat currencies because gold preserves its value and is a store of value.

What are bitcoins used for? All potential applications, such as payment and privacy payment, have been done by Ethereum. However, Ethereum’s market capitalization is less than half that of Bitcoin, and it’s clear that such uses do not support Bitcoin’s price.

The stored value of Bitcoin supports the price of Bitcoin, which lies in invariance, stability, and security.

How big is the market for stored value? First, gold currently has a monopoly position, which means that it occupies 85% -90 % of the market share, which is around 11 trillion US dollars.

If Bitcoin replaces half of the gold market with $5 trillion, according to the proportion of gold, the public will keep half, the central bank will keep 20%, and industrial uses and institutions will keep 30%; that is, the central bank will have 1 trillion US dollars of bitcoin. So the point is why central banks keep Bitcoin.

Is there anything else I need? Reserve currency. Both the central bank and individuals need it. Everyone needs to save money, which is also a currency reserve. If you can make money by storing bitcoins, the market is vast. Satoshi Nakamoto’s failure to sell Bitcoin is itself a reserve behavior.

7. Bitcoin is scarcer than gold

Bitcoin is produced in a way that mimics gold but is scarcer than gold. And it has better monetary properties than gold. For example, the total amount is limited, the transmission is convenient, it is easy to divide, and it cannot be counterfeited and easily identified. Gold is the consensus humans evolved; bitcoin surpasses gold and can have the status of king. Bitcoin is just one step away from being king.

8. Bitcoin should anchor economic development

The Federal Reserve anchors the US dollar to good’s rising prices and adjusts the issuance of US dollars according to increasing prices. Here it is further divided into core prices and non-core prices. Economic development is produced by many people and should be regulated by the market rather than by an organization. The adjustment of the Federal Reserve has the right of God but not the hand of God.

In the Bitcoin standard, Bitcoin anchors economic development, and the adjustment at this time is a market adjustment, just like the current transaction method of pricing the US dollar through the market. Therefore, it is precise that the Federal Reserve should price the U.S. dollar, just as the People’s Bank of China sets the price for the renminbi. It happens because no anchor is linked to and reflects the development of the world economy. Therefore, it is the biggest demand for Bitcoin.

9. Bitcoin has no price ceiling; imagination creates demand

There is a saying in the stock market that buying stocks is buying the future. Looking forward to future rises, you will buy in advance. Generally speaking, after the stock is analyzed, some analysts will give the stock’s upward target, which constitutes the rising price ceiling. Bitcoin doesn’t have such a top because it’s a commodity that goes up as long as there’s demand. And Bitcoin’s grand narrative creates that need.

10. 24-hour trading, quick response to economic risks

Forex is a 24-hour trade; the stock market is not. Bitcoin is also traded 24 hours a day. Generally, the Fed releases data when the stock market is closed. The stock market can’t reflect it at all, but Bitcoin can. Coupled with high volatility, it attracts speculative funds to hype.

The following section will continue to introduce the characteristics of Bitcoin.

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This series provides the conceptual explanations and summaries needed to read chapters 10-13 of the article “Invite Satoshi Nakamoto to welcome the new world” and the previous article Q&A 1-10.

1. Full-text links

This article was published in Bitpush Serial.

Chinese link:


English link: https://en.bitpush.news/?s=Weisha+Zhu

2. Supplementary video explanation (over the wall in China)

This series of articles has been explained on Sun TV, and the papers and TV explanations are complementary.

The TV show is the interpretation of the point of the article. Broadcast schedule: The broadcast schedule is as follows:

Every 1, 3, and 5, Beijing time noon.

Sun TV’s link is as follows:

The whole program is divided into two parts. The first part proves who Satoshi Nakamoto is, and the second part is about the Bitcoin standard. The program will continue, followed by discussions and Q&A, hoping to form a Bitcoin-based theoretical system. Users are welcome to leave messages in the TV comment area, and viewers will be selected to participate in the conversation.

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