What is the value of Bitcoin?


Recently, the high handling fees of BTC have become hot again. After Bitpay announced that the minimum payment amount would be raised from $5 to $100 due to the rise in miners’ fees, and the founder of bitcoin.com website said that he had thrown out all the BTC, yesterday a charity Pinapple changed a large number of BTC into BCH because of excessive handling fees and slow transfer.

Congestion and high fees have become the two major tags of BTC. If Bitcoin’s fees remain high, will its value be affected in the long run? We need to go back to the source and explore where the value of Bitcoin comes from.

Many people do not understand why Bitcoin is valuable, let alone why the price of Bitcoin is more than 100000 RMB. The most incomprehensible thing is what people in coin circles often say, “one coin, one villa.”

If you can’t understand the “value backing” of Bitcoin, you will never be able to hold Bitcoin for a long time. Even if you buy some Bitcoin, you are just speculative passers-by, get on and get off the bus, and live with fear every day. I heard about Bitcoin in 2012, holding Bitcoin in 2014, and then using Bitcoin to participate in crowdfunding in 2017 in exchange for a variety of digital currencies. I have been in this trend for more or less five years, and it is only in recent months that I have thoroughly understood the nature of value and the value backing of Bitcoin!

I am a slow investor, relatively rational, and I didn’t see the value nature of Bitcoin until it rose to 30,000 yuan. But since then, I have become a firm digital currency “value” investor, the creator and guardian of “digital wealth”, confidence has never been so firmly on the road again, leading to the future era of digital wealth.

To understand the value of Bitcoin and the subversive and destructive nature of blockchain technology, we usually need to read at least three books, out of Control, the denationalization of currency, and the rabble, all of which were written before 1999. but the content describes the decentralized wisdom of biology, the future of money and finance, and the immutable human nature. If you haven’t read these three books, or you haven’t understood the essence of them, or if you can’t relate these theories to the value of Bitcoin at all, please read this article carefully. this article will try to explain the value of bitcoin in a more easy-to-understand way.

P.S. This is a secret that those currency tycoons will never share with you. If you understand it and act on it, your value can be increased tenfold again.

Before we try to understand the value of Bitcoin, consider one question:

What is the nature of value?

To answer this question, I’m going to ask more relevant questions in succession:

1) what is the value nature and price support of luxury goods?

2) what is the value nature of game virtual props and game equipment?

3) what is the value essence of all the consumption and reward behavior around the stars?

4) all brand products have brand premium. What is the value nature of brand premium?

5) A diamond lasts forever, so what is the value nature of a diamond?

6) roses on Valentine’s Day are several times more expensive than usual. what is the essence of the value of roses?

7) what is the value nature of Mickey Mouse Donald Duck, Hello Kitty, Cultural and Creative IP?

8) what is the value nature of works of art? Why is the Savior worth $450 million?

9) the last question is, what is the nature of money? What is the value nature of gold and paper money?

Next, instead of reading, let’s take a look at Leonardo da Vinci’s “the Savior,” the most expensive painting in history that has just been auctioned for $450 million. At the same time, think about these nine questions and think about it:

What is the essence of value?

If you live in a working-class social environment, there is no need to consume luxury goods at a high premium. A 10 yuan canvas bag is enough to meet your needs.

If you don’t play games, you won’t understand the logic of spending money on virtual props and equipment, and you can’t imagine anyone specializing in this profession, selling the equipment and props you spent time shooting down to other players to make a profit.

We used to chase stars in our childhood, but we just bought a poster and put it on the bedside wall, and today’s way of chasing stars at the back door of the 90s has surprised the post-80s uncles, not to mention the post-70s and post-60s grandfathers.

Live reward, this is a logic that the older generation can’t understand, and even some male anchors can earn 300000 yuan a month by chatting jokes to the mobile phone camera every month. I really don’t know what “value” the little girls who rewarded him got when they paid for it.

Starbucks can sell for 25 yuan for less than 5 yuan for a cup of coffee, and the 20 yuan premium, like all brand premiums, has become a way of life for middle-class consumers. Can be a large number of brands, different brands for different groups, groups may not buy, you drive BMW, I drive Smart, you wear Armani, I wear Uniqlo, your suit and tie my T-shirt jeans. Brands attract different user groups through value propositions, who are willing to pay for the premium of their chosen brands.

Diamonds are hard, the hardest substance in the world, but what is the practical use besides making drills? So the Jews told a story that women all over the world believed, and from then on the young boys had to spend all their money to buy a hard stone for the woman they loved, and wear it on the woman’s ring finger at a moment witnessed by the whole village. The value of a diamond is just a widely accepted hoax, but it doesn’t matter if we believe it.

Valentine’s Day roses are several times more expensive than usual. it is not that roses themselves are more beautiful and colorful on that day, but that people need to use them to convey love or gag some people on this day. The appreciation value of roses is not much higher than that of grass tail flowers, but the price is ten thousand times higher. We men willingly accepted the premium, just because everyone accepted the scam that “roses represent love”.

All the IP images of Mickey Mouse, Donald Duck, Hello Kitty, rogue Rabbit, etc. can increase the value of the T-shirt tenfold or even a hundredfold when printed on the T-shirt, not because the printed Mickey Mouse T-shirt is more comfortable and warm, but because everyone knows this mouse and everyone likes this mouse, and we need everyone to like us who wear Mickey Mouse, just as they like Mickey Mouse.

Works of art have high appreciation value and scarcity, so there is more room for appreciation after the death of the painter. But is the value of appreciation really worth tens of millions or even hundreds of millions of dollars? Isn’t it the same as appreciating copies hanging on the wall? High imitation works of art are not much worse than the original paintings in terms of appreciation; would buyers be willing to pay such a high price if it were not for a large collection of art collections, and if they did not believe that someone would be willing to collect them at a higher price in the future?

After answering all the questions, we should be able to realize that if we don’t give value to one thing, there is no intrinsic “value” to anything. The air and water that are most important to our lives are free, and the food that can fill us is extremely cheap. strictly speaking, most of the amount of money we spend on our monthly bills is not necessary for survival, but it is necessary for life. The “premiums” attached to a variety of goods and services are “unreal” and are only the “group consensus” that exists in our imagination.

This is my conclusion:

The essence of value is consensus!

Although there are only eight words, it took me nearly 40 years to find it. I am glad to be able to understand that the essence of value is consensus before the age of 40. On the basis of this consensus, we will not be so tangled and hesitant to participate in the creation of digital wealth in the digital currency era. The market capitalization of digital currencies represented by Bitcoin will eventually surpass that of gold because this consensus group is growing and its wealth is growing.

Many readers may think that the nature of money is not consensus, but the coercive force of government and guns. In fact, this understanding is incomplete. There are many ways and reasons for the emergence of consensus, and government enforcement is only one way of generating consensus. In our society, there are many other ways to generate consensus:

Authoritative person endorsement, corporate credit, historical heritage, science, religious belief. All these can lead to a consensus. Just like the “atonement coupons” once sold by Catholicism, if you don’t belong to that sect (consensus group), you certainly won’t spend money on atonement coupons. The reason why gold is still valuable is no longer because of the gold standard imposed by the government, but the historical and cultural traditions that remain in our minds. When we get married, we still like to wear gold and silver, and when our children are full moon, relatives and friends still send gold ornaments to represent good wishes. Policies can be changed overnight, but historical and cultural traditions cannot be changed overnight. So the value of gold and the value of bitcoin are essentially consensus; one consensus is historical heritage, and maybe this consensus group is getting smaller and smaller; one consensus is digital belief, and it seems that this group is getting bigger and bigger.

We can’t understand the value of something, just because we don’t belong to the consensus group of that thing!

Brand is consensus, culture is consensus, trend is consensus, diamond is consensus, currency is consensus, politics is consensus, religion is consensus, law is consensus, folklore is consensus, credit is consensus. In a broad sense, the operation of human economy and society is based on a variety of consensus. The vision put forward by the enterprise is essentially a broad consensus between founders and employees and shareholders as well as users. So I would like to call Silicon Valley’s so-called “encryption economics” as “consensus economics” in English: Consensus.

Where there is consensus, there is value, and to create value is to create consensus! The main significance of the government rescuing the market is to activate the confidence of private capital, which is a kind of bullish consensus. When the bullish capital exceeds the bearish capital, the market index will rise. The core of government regulation is consensus guidance.

Michelin Restaurant and Victoria’s Secret Show are consensus built in the minds of consumers through continuous marketing.

The marketing effect of the Victoria’s Secret Show probably began to show in the second decade of the show. it not only attracted the audience, but also created a sales myth. 35% of the lingerie market in the United States is controlled by Victoria’s Secret. Analyst Erika Maschmeyer once said, “underwear and pajamas can be sold anywhere, but no one gives the brand such a strong connotation (consensus) as Victoria’s Secret, and the Victoria’s Secret Show takes a lot of credit.”

Recently, a speech by SoftBank Sun Zhengyi hit the moments that “digital assets will become the greatest asset of mankind.” Why would he say that?

Primary industry: agriculture. Secondary industry: industry. Tertiary industry: service industry. These industries are either mature or stable, although the service industry continues to develop, the ceiling of human wealth creation in the atomic world is becoming more and more obvious. If we want to continue to promote economic development and continue to create endless wealth, then we have to make efforts in the fourth industry: digital industry (virtual industry), the imagination of this world is unlimited. Bitcoin has created a value of $260 billion for the world out of thin air, and other digital currencies add up to $100 billion (the market capitalization of Ethernet Fong alone is nearly $50 billion). This wealth and value are all created in the digital world. this is just the beginning.

In addition, based on the recent development of “encrypted Cat Cryptokitties”, which is essentially a new value (consensus) created by the digital world, it is not difficult to understand the popularity of encrypted cats after understanding that the essence of value is consensus. If you are interested, search for “Ethernet Square encrypted Cats” or go to the official website to see what a digital cat worth 920000 ETH looks like:

The era of digital wealth has just arrived, it is still 2: 00 in the morning, it is dark, we can only grope our way forward, and many people are still repairing the tiredness of the last era in their sleep. And we have set out, although the road ahead is rugged, but the dawn sun is 4 hours away!

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