Zhu Weisha, December 11, 2024
After my article was published, stating that the compound annual inflation rate of the dollar against gold has exceeded 8.1% over the past fifty years and is the main cause of wealth disparity, some readers believe that relying solely on historical Chinese data to explain the collapse of the dollar after about a hundred years is not convincing enough. After all, the current means are much more advanced than ancient ones.
Human nature is actually constant, and natural laws are unchanging. This article analyzes from the perspective of natural laws once again, and the conclusion is consistent. It must be noted that specific times are just references; the trend is predictable.
Characteristics of Natural Growth Curves
Modern biologists R. Pearl and L. Reed studied population growth laws, as shown in Figure 1. This special curve is called the Peir growth curve, abbreviated as Peir curve. The prediction method of the Peir curve is based on the historical data of the predicted object that has the trend of the Peir curve's variation and fits it into a Peir curve using the Peir formula for prediction. Since population growth is natural, the Peir curve is also called the natural growth curve.
Figure 1: Peir Curve
In analysis graph 1, the pattern of the curve in the figure can be seen:
(1) There is a peak,
(2) There is an inflection point,
(3) The growth at the top and bottom is relatively slow,
(4) Generally presents a symmetrical shape.
(5) The graph is divided into three stages: accumulation period, high-speed growth period, and maturity period.
(6) The high-speed growth period is twice the duration of the accumulation period.
Predicting the growth curve of Bitcoin based on the Peir curve
Metcalfe's Law describes the value of the internet. It states that the value of a network is equal to the square of the number of nodes within that network, and the value of that network is proportional to the square of the number of internet users. This can describe the growth of internet companies' value. Different companies have different promotional efforts, and the growth rate of users varies, resulting in different curve shapes. This inspires us to think, what should the user growth of Bitcoin look like? Can Metcalfe's Law describe the value growth of Bitcoin? In fact, the three factors affecting Bitcoin's intrinsic value are computing power, number of people, and amount of money. Assuming that wealthy and non-wealthy users are distributed proportionally, Bitcoin is a leaderless system without corporate promotion. We believe that the growth of Bitcoin's computing power and user growth are both natural growth, just like population growth. Therefore, the Peir curve can be used to predict Bitcoin's price growth.
The article on the natural growth curve of Bitcoin was published on December 6, 2022, on the Bitcoin Push website. This article predicted Bitcoin prices based on 33 cycles under the condition of excluding inflation in Bitcoin's standard. It pointed out that cycles 1-3 are accumulation cycles, cycle 4 is an inflection point cycle, cycles 4-9 are high-speed growth cycles, lasting twice the length of the accumulation period, cycles 10-12 are stable growth cycles, and the subsequent Bitcoin growth synchronizes with economic growth. The inflection point of cycle 4 is confirmed by the entry of mainstream funds such as BlackRock. In fact, trend prices can be predicted, but short-term prices cannot. The vertical axis data represents the dollar.
Figure 2 The natural growth curve of the first 15 cycles of Bitcoin
The development of the mobile phone market also conforms to the natural growth law.
Mobile phones also belong to natural growth. Figure 3 shows the growth curve of mobile phones from 1980 to the present, with the accumulation period from 1980 to 1995 being 15 years. The high-speed growth period is from 1996 to 2019, lasting 23 years. After that, it enters stable growth. It can be seen that the high-speed growth period is less than 30 years, while the forecasted high-speed growth period for Bitcoin is 24 years.
Figure 3 The natural growth curve of mobile phones
Typical Ponzi scheme curve
An anonymous author published an article on Sina analyzing Ponzi schemes using simple mathematical calculations. The article simulated a typical Ponzi scheme curve with mathematical formulas and hypothetical data. See Figure 4. It can be seen that the Ponzi scheme curve is very similar to the natural growth curve. At the top, conditions constrain it; once equilibrium cannot be maintained, it collapses. The slope during the high-speed growth period is steep, but the rule that the high-speed growth period is twice that of the accumulation cycle still holds.
Figure 4 Ponzi Scheme Curve
Predicting when the dollar will collapse based on the natural growth curve.
With the data above, let's analyze the US dollar. US debt is the backing of the dollar. Figure 5 is selected from a report by Wind (over the past 53 years, there is a subtle relationship between gold prices and the total US debt). The yellow line represents gold, and the black line represents government bonds. It can be seen that the growth curve of US debt is slightly steeper than that of mobile phones but less steep than that of the Ponzi scheme curve. The slope of the US debt growth curve is between the slope of mobile phones and the Ponzi scheme curve.
Figure 5 Comparison of US debt and gold prices from 1970 to 2023.
Using the natural growth curve to describe it, the period from the collapse of the Bretton Woods Agreement in 1973 to 2000 is 27 years, serving as the accumulation period. The reason for selecting 2000 is that gold had not yet started to rise. After 2000, gold began to rise significantly, consistent with the slope of government bonds. According to the logic calculated above, the high-speed growth period is twice the time of the accumulation period, starting from 2000 and ending in 2054. Adding the 27 years of stable growth gives us the time for the dollar's collapse. The credit dollar lasted 108 years. This predicted data is consistent with the lifespan data of fiat currency issuance in Chinese history.
The dollar is the best currency in the fiat currency system, and its collapse signifies the end of the fiat currency system. Since the 1980s, people have begun to build a financial lifeboat for humanity, giving rise to a generation of human elites. Satoshi Nakamoto is their outstanding representative. The emergence of Bitcoin is not a coincidence; it aligns with the historical trend. Moreover, Bitcoin's standard allowing the currency system to return to asset-based currency is also a historical trend. In December 2022, I suggested that Bitcoin be used as a reserve currency to address US debt, and today, some have already implemented it. I believe that the Bitcoin standard I proposed will shine brightly. Relevant content can be found in the DW20 Decentralized Standard Currency White Paper.
Original link
