Author:Yishi
Note: This article was originally published on November 4, 2023, when the price of BTC was $34,522. The text has not been modified in any way.No investment advice is provided, and there is no position or judgment regarding future market conditions.
Please provide the text you would like me to translate from Chinese (Simplified
The mountain rain is about to come, and the wind fills the tower. 1284 days ago, I left.Episode videoThis is about the Bitcoin halving, predicting that the price will rise to $55,000 after the halving.
That day was April 17, 2020, and the closing price of Bitcoin was $7,125.Several years have passed, and the halving is about to happen again. To be exact, it will occur at some point in April or May 2024.
This is the fourth halving in Bitcoin's history, and also the last opportunity for ordinary investors, like an ancient city wall under a setting sun, leaving only a door crack as thin as a thumb.When this door closes, the last chance to get on the train will also disappear.Xiao Feng's greatest regret those years ago was not being able to save Ju Wu. "I am a Khitan, how could I possibly have any great ambitions or achievements?"A golden vase falls into the well, no turning back arrow.
What I regret most is that in the past ten years, I've been deeply focused on starting a business, but I haven't stockpiled enough coins, while the game is already coming to an end. That's also a kind of fate.
How to define scarcity
An Arab scholar, Saifedean Ammous, wrote a book called "The Bitcoin Standard" in 2018. In this book, he discussed a...Existing stock - Production quantityIn short, it is the relationship between inventory and annual production.
When we talk about inventory, we are referring to the total quantity of a product.Annual output refers to the total amount of this product manufactured in one year.Dividing the two gives a ratio called SF.
In the chart, you can see that the SF (Sustainability Factor) for gold is 62 and for silver it is 22. What does this mean? It means that it would take 62 years to produce the same amount of gold currently available, and 22 years for silver, while it would take only 0.4 years for platinum. This all indicates one thing:They are particularly scarce.
We then began to wonder whether these items became money because they were scarce. In contrast, platinum and palladium have an SF value equal to or less than 1, which indicates that they are not as scarce.
That is indeed the case; gold preserves value better than any other metal listed in the table.The goods we use in our daily lives, such as food, cell phones, computers, and cars, all have an SF value much less than 1, meaning they have never been scarce. Why is that? It's because as long as there is demand for a product, you can produce it. When someone tries to hoard a product and its price rises, more companies will enter the market to produce it, which will inevitably cause the price to fall.
This is a common knowledge of supply and demand balance.Therefore, we can easily come to a conclusion that,If a commodity has a higher SF, it can better maintain its value and is less likely to be diluted.
In 1972, the price of gold was $46 per ounce, and in 2020, it reached a new high of $1,744 per ounce, increasing by a total of 37.9 times. If gold is so valuable, why don't we produce more to meet the demand? The reason is that the amount of gold that can be mined is limited by mining technology and the costs involved.If you spend more on doing something than you finally earn, you definitely won't do it..
So, what is the SF value of Bitcoin? A total of 19.5 million Bitcoins have already been mined in the world. However, there is one paper that...Research ReportAs mentioned, in fact, over 1.6 million of these 19.5 million bitcoins have been permanently lost.
So,The actual amount of usable Bitcoin is around 17.9 million.At the current annual production rate of Bitcoin, its Scarcity Factor (SF) is approximately 54, which is similar to that of gold.In a few more months, the supply growth (SF) of Bitcoin will rise to 108, resulting in an annual inflation rate of about 0.9%. This would mean that,Bitcoin has become the most scarce asset in human history since gold..
Halving is the fundamental reason that changes Bitcoin's supply dynamics, and nothing else.This supply relationship determines the cryptocurrency's price.Some people get all excited at the mention of a Bitcoin ETF, as if its approval would immediately send the price skyrocketing, as if that were some kind of tremendous achievement.I suggest you not pay attention to the sensational headlines in the media, but instead look at the substance.
It doesn't matter whether the BlackRock Bitcoin ETF is approved or not, and it also doesn't matter when it is approved.What's important is the expectation of a "Bitcoin ETF approval," which acts as bait to mobilize market confidence and will gradually...Form potential energyUnknowingly drive the coin price up to over $45K in the future.You think it's still a bear market, but in fact, the bear market has quietly ended without you realizing it.And this potential energy will continue—it's not like the water pipe in your home.
BlackRock and the subsequent ETFs are like the Suez Canal (Arabic: قناة السويس), connecting old money with new capital. The sheer size of insurance capital coming from traditional finance is larger than many people imagine.Bitcoin is not too expensive for them, but too cheap, the dish is too small.
The Suez Canal, stretching grandly across the landscape, connects north-south waterways between Europe and Asia. Since its opening, ships no longer need to sail around the Cape of Good Hope at the southern tip of Africa. Fleets departing from London in the United Kingdom or Marseille in France can now head directly to Mumbai, India, returning laden with gold, silk, and spices.
Darius I, the king of the Achaemenid Empire, completed the final section of the Suez Canal in 500 BC. He erected a granite stele in one of the waterways, which reads:
I am a Persian, rising from Persia to conquer Egypt. I command the opening of this canal, starting from the Nile and flowing through Egypt, ending at the vast sea bordering Persia. Once this canal is completed, Egyptian ships may follow it directly to Persia, fulfilling my wish.
Cool, awesome, and amazing, that's the charm of the channel.
The approval of a Bitcoin ETF affects not the present, but the next ten to twenty years. Once the on-ramps and off-ramps for fiat currency are clear and unobstructed, the rest is left to time.
By 2025, we might really see Bitcoin reaching $100,000 or more.
Bitcoin, gradually evolving into Manhattan's land, has become a(n) ______.Social status markersPeople choose Bitcoin not because it transfers faster than other currencies, but because it is valuable.It is expensive because it embodies the most fundamental consensus in the entire cryptocurrency space. As a vehicle for value storage and as a status symbol within social relationships, it is highly coveted by everyone.
Bitcoin represents your strength, stability, loyalty, and belief. It is your siheyuan courtyard house within the Second Ring Road in Beijing, the old Western-style villa on Hengshan Road in Shanghai, or the villa on Hong Kong's Half Mountain.Its value is determined by the wealthy class with real purchasing power.For example, a single share of Berkshire Hathaway Class A stock can be as high as $530,000. Funds are flocking to it, and its popularity has remained undiminished for a long time. It is extremely difficult for individual investors to even buy one share. What can they do about it?
Ten coins can make one a marquis.
Price Anchoring Game
If someone doesn't understand how the price of a cryptocurrency is pegged, they haven't truly understood Bitcoin.I'll first talk about land, and then go back to Bitcoin.
Everyone has played "Monopoly," right? But I rarely see anyone mention its essence.You need to be clear that the role of the Federal Reserve is similar to that of the bank in the board game Monopoly,Its goal is not to win, but to provide sufficient funding to keep the game going..
For the Federal Reserve, the appropriate quantity of assets is the amount that best enables it to fulfill its responsibilities.Monopoly is essentially a game about real estate speculation, with the core concept being resource monopolization. The game has only one winner, while the other players become casualties.Success does not come from competition, but from monopoly.
Question: Where does the fiscal revenue of a central empire come from?
Answer: There's no difference from Monopoly, it's just:
- State-owned enterprise
- State-owned land
- Monopoly financial system
For an authoritarian government, this game concerns only two points:
1) How to control the entire society with a top-down bureaucratic system;
2) How to sustain this bureaucratic system through commissions from the land, tax, and financial systems.
All countries in the world are similar, and there is not much difference between ancient and modern times, or between the East and the West.Taking the Tang Dynasty as an example, the government implemented the Equal-field System. Whenever a male child was born, he would be allocated 80 mu of public land and 20 mu of perpetual land (private land). When a person reached adulthood, he would cultivate wasteland, pay grain taxes, and perform labor services. Each year, a certain proportion of the harvest was collected by the government. After a person's death, the cultivated land would be reclaimed by the government.At the same time, the emperor also allowed local government offices and bureaus to possess operational land and funds.This system eventually collapsed because land became increasingly concentrated in the hands of bureaucrats and the aristocracy.
For example, during the reign of Emperor Gaozong of Tang, a man named Wang Fangyi owned a vast amount of farmland, approximately dozens of qing in size. During the reign of Emperor Zhongzong, Princess Taiping also possessed a large amount of land, spread across fertile areas. These lands were rented out to poor farmers, with most of the harvests going to the aristocrats. The government also imposed additional taxes on top of that. Many people, in order to avoid corvée labor, fled to the countryside. The government first recorded the names of these evaders in official registers, and later even issued orders requiring these fugitives to pay taxes. As a result, people either had to sell their land and houses or transfer them to their neighbors. This cycle continued endlessly until there was nowhere left to escape.
What if the game is lost? Just start a new one.
Therefore, dynastic changes and peasant uprisings lead to the redistribution of resources.It's the same in modern times; the asset values promoted by East Asian countries are largely tied to land.This is the game rule set by the government, and the medium is housing.Meanwhile, the United States emphasizes capital efficiency, so the mass game they play is the stock market. The purchasing power represented by the 401(k) retirement accounts of its citizens serves as a reservoir.
These are all different price anchoring games,Countless similar replicas are scattered around the world—Rolex watches, Hermès Birkin bags, Yu-Gi-Oh! trading cards, limited blind box figurines... All are no different..
New York, USA, is developed enough, and the building density is high enough, right?However, there are still more than 25,000 idle or underutilized plots of land—25,000 in total (the light-colored areas in the image are all vacant land).Even some peopleProposalMentioning the imposition of a 3.5% tax on these lands, thereby bringing an additional $429.9 million in revenue to the city.
Beijing, the city with the most concentrated population in northern China, has a jurisdictional area of 16,000 square kilometers, but its actual developed area is only 2,000 square kilometers, giving it a land development rate of merely 12.5%, even more restrained than Hong Kong's (25%).
If Beijing wants to achieve a per capita large villa standard, it is actually very easy. According to China's planning standard of 10,000 people per square kilometer, after fully developing this city, it could accommodate 160 million people.If that is the case, why haven't these governments opened up and built more housing to provide shelter for the poor?
In this game, land is a means of production. Monopolists must maintain its scarcity to keep the game going.What is price anchoring? This is what price anchoring is.To win, you must understand Bitcoin's position in the crypto gaming space.Bitcoin is the same as land; the only difference is that it lacks a supreme authority. What maintains the entire system's operation are algorithms and consensus.
In other words, it is almost unbreakable.Bitcoin's largest anchor is the consensus on its maximum supply of 21 million.We can easily putPeople who hold Bitcoin are categorized as the "Bitcoin-owning class," while those without are classified as the "non-Bitcoin-owning class."With a global population of 8.045 billion people sharing 21 million bitcoins, each person would only receive 0.0026 BTC, which is nowhere near enough to distribute fairly.
You might question, "You keep talking about consensus, but it's all paper-thin. I'm done playing this game—can't I just start something new on my own?"In fact, many people in the past also thought this way, and they disproved it through their actions.The recent years have witnessed a big Bitcoin forking trend, which is like setting up a private server by oneself. But what about now?These forked coins lie in ruins today, serving as a monument to those naive ideas of the past.
If consensus were so easily changed, the world's wealthy wouldn't need to hold on to Manhattan; they could just buy some undeveloped land in Ohio and build a new capital. But do you really think that's realistic?Establishing a value coordinate system is a long process, and once established, it is unlikely to change significantly within a century.
Who tricked you out of your coins?
Some people have clearly seen the golden cheat codes for passing levels, yet they still give up on this game too quickly.Holding onto coins is so simple, yet for some people, it's as difficult as reaching the sky.If it's a game, there are levels.In the past few cycles, the go-to strategy for organizers has repeatedly been various altcoin narratives.People complain with their mouths but act with their bodies; they love Bitcoin with words but buy altcoins with their hands.This just falls into the dealer's trap, you obediently hand over your chips. You get the trash coin, he gets the Bitcoin, and they call each other a fool.
New public chains, platform tokens, forked coins, MemeCoins, storage, computing power... When you take a closer look, they're all big traps.When we evaluate an asset, we shouldn't just look at its performance over a few days or months. During bull markets, even the most trivial assets can rise sharply and "outperform Bitcoin." But I ask you: aside from those KOLs who write misleading articles to scam money, how many people have actually held altcoins long-term and achieved significant results? Over annual cycles, how many have genuinely outperformed Bitcoin? Just listen to their stories.
In 2017, the narrative for public blockchains was about surpassing Bitcoin; in 2021, the narrative shifted to surpassing Ethereum...In the primary market, PVP players are cutting each other; in the secondary market, stories are fabricated to deceive new investors.Besides Bitcoin, there are no truly decentralized crypto assets in this market.Buying any shill coin is like joining an unfair poker game.
Web3 teams, especially anonymous teams issuing tokens, are...Severely against human nature.When you can fork a project, modify the frontend a bit, and gain huge profits,No one will do things for a long time..What is the original aspiration? The original aspiration is to make money quickly.
Tokens can corrode the mindset of a startup team.Traditional internet startups have been working hard for several years, raising funds through Series A, B, and C rounds. In each round, they cash out some money to improve their living conditions, which is not unreasonable.Once in the cryptocurrency circle, the rhythm changes: start trading and mining today, list on an exchange tomorrow, dump the coins and leave the day after, and return the project to the community.Expecting to find a team that actually gets things done here is as difficult as fishing for gold in a pile of shit.
So I said this card game is unfair.To win the game, you need to employ strategies.The strategy has nothing to do with short-term profits or losses, nor is it related to macroeconomic factors, or even the size of the pool. A successful strategy depends on whether you make the right choices. Every time you decide to buy coins, you should repeatedly ask yourself:
- Should I participate in this game?
- How much should I bet?
- Is my entry point the best?
- Can I force my opponent to fold and exit the game?
If you can make more accurate decisions than your opponent, then your strategy is viable.Even if you can't win the biggest pot this time, as long as you keep going, your chances of winning will accumulate, eventually leading to great success.But based on my limited experience, there seems to be only one strategy for mathematical expectation in the cryptocurrency market: accumulating coins in batches during a bear market and gradually exiting positions during a bull market phase.The thing that altcoins are best at is making you mistakenly believe that they are as enduring as Bitcoin. Their narratives and lies intertwine until you genuinely believe them, and then you obediently trade your Bitcoin for other tokens that will ultimately turn out to be worthless in the long run.
Over the past year, the exchange rate between Ethereum and Bitcoin has been the perfect trap, with a pile of casualties beneath each red line.I have no doubt that one day the bull market will return and Ethereum will rise again to a high position. However, if you are choosing an asset over a 10-year cycle, the entire cryptocurrency market offers you only one choice: Bitcoin.As long as the cryptocurrency market continues to thrive, Bitcoin will not wither.If Bitcoin is ultimately proven to be false, the entire cryptocurrency market would no longer exist.
Understand the base position
To hold onto Bitcoin, you must clearly understand the quality of the assets you hold.Two mainstream viewpoints:
1) Bitcoin is a safe-haven asset; it is the first to be affected during times of war and chaos, and it tends to rise first.
2) The government protects leeks (as individuals).
All of the above are wrong.
Bitcoin remains a risky asset to date and will likely retain this status for a long time.In 2020 and 2021, the government printed large amounts of money, injecting significant liquidity into the global economy, which led to a bull market in global assets. The speculative nature of these assets aligned with the surge in fiat currency liquidity.
The purpose of the government has never been to protect the weak, but rather to...Ensure that each mine contributes sufficient taxes and provides necessary labor value before being reclaimed by the system.The government is not a "person"; it is a machine that maintains the operation of its system by monopolizing resources within its jurisdiction.
The most important component of this machine is fiat currency.In 1260, Khan Kublai began issuing paper money.They used the bark of the mulberry tree to make paper money. They took a very thin, white inner layer from between the wood and the rough outer bark of the mulberry tree. This inner layer, after processing, became something similar to what we now call paper, except that it was black in color.Once the paper is made, they will cut the paper into pieces of various sizes.Each piece of paper represents the solemnity of real gold and silver. Why? Because officials would sign their names and stamp seals on these pieces of paper.
After being ready, the officials appointed by the Khan would take his jade seal, dip it into bright cinnabar red paste, and then press it onto a piece of paper. Once that red seal appeared on the paper, this sheet of paper would become real gold and silver currency.Anyone who dares to counterfeit such currency shall be sentenced to death.The backing of paper money is the authority of the state.But the authority of the state has a fatal weakness: it lacks constraints.
Question: Who regulates the mechanism of paper currency issuance?
Answer: No.
After the transition to a credit standard, currency issuance relies entirely on the central bank's discretion, and even the debt ceiling can be arbitrarily adjusted.In my opinion, the word "upper limit" could also be removed. If everything can be adjusted freely, then what's the point of calling it an upper limit?
The complex theories and models crafted by economists are nothing more than attempts to persuade us that the central bank's issuance of paper money is subject to self-imposed constraints. But if you just take a look at the Federal Reserve's balance sheet, you will realize that since the beginning of the credit standard era, these so-called constraints have been mere empty words.
When material resources were scarce, issuing paper money became the main way to ease the problem. I remember when I was a child, a steamed bun only cost 25 cents, but now in Shenzhen, you need to pay 3 yuan or even more. The currency has depreciated 12 times. If we can get used to the price of steamed buns increasing 12 times, then in the future, even if the currency depreciates another 12 times, what could we possibly not accept?
We have gradually become accustomed to the current ways of paying bills and receiving salaries, and we are used to the numbers on our bank balances and credit card statements.Only when the system crashes do we begin to think,What is the real value behind these numbers?.In a nutshell, when the government prints money, it is essentially borrowing time from everyone who holds cash, hoping that future social productivity will be sufficient to repay this debt. Whether or not this can be achieved is not a concern for the current government.
Bitcoin, in particular, serves as an effective hedge against inflation.Its essence is a rug pull against fiat currency.The long night is coming, and from this night on, you will stand watch until death. Devote your life and honor to the Night's Watch. So it is tonight, and so it will be every night.
Remember, hold onto your Bitcoin.