Author: Zhu Weisha March 1, 2024
Bitcoin is now widely known in society. Compared with its popularity, Bitcoin has been lukewarm in the past 15 years. Why has it not been widely popular?
First of all, it is because people do not know enough about the connotation and significance of Bitcoin. Bitcoin is called "digital gold" and it has the ability to fight inflation. In more popular terms, Bitcoin has the same function of preserving value as gold. Compared with ordinary currencies, Bitcoin has the advantage of not depreciating and even having the ability to increase in value significantly.
Bitcoin ETFs solve the barrier to entry problem
It is an indisputable fact that legal tender (ordinary currency) has been depreciating. There are many people who want to buy Bitcoin to fight against inflation risks. The market has extremely high potential purchasing power for Bitcoin. However, it is difficult to really buy Bitcoin because the threshold of Bitcoin is too high. Traders need to know how to use encrypted wallets, understand mnemonics, private keys, public keys, and a long string of incomprehensible addresses. Private key custody is also a big problem, so losing coins is a common phenomenon, and there is also the risk of being stolen. In order to avoid the above risks, some people will deposit Bitcoin in centralized exchanges, but exchanges cannot be fully trusted because scandals of misappropriating customer assets without authorization occur from time to time; the cost of converting cryptocurrency into legal tender is about 1%-3%, and the handling fee is too high; the exaggeration of negative news... and other factors, including unclear legal boundaries, have caused people to give up the idea of buying Bitcoin due to many factors such as lack of understanding, inability to use, and insecurity.
The issuer of Bitcoin ETF is a creditable financial institution with a mature regulatory system, so compliance and security are not a problem. Moreover, it can be purchased directly in US dollars, which saves the conversion cost of converting legal currency to crypto stablecoins, and conforms to the existing purchasing habits of users. The problems of security and ease of purchase are solved, and the handling fee is lower, so that previous potential customers have become purchasing customers. It can be expected that the number of investors will show explosive growth.
For people who don't know anything about cryptocurrencies and just want to fight inflation, buying Bitcoin directly has the risk of going to zero, but buying Bitcoin ETF is different. Although you need to pay a small fee, you get security and it conforms to the user's habits. For example, buying 0.01 Bitcoin sounds weird, but buying $600 of Bitcoin feels much better. Bitcoin ETF cleverly solves some problems in Bitcoin transactions, making it more convenient, safe, efficient, and cost-saving for everyone to buy.
Bitcoin has the security of bonds and the potential to outperform stocks
There are two types of assets: bonds and stocks.
Bonds have low risk, but the profit is in the single digits. Bonds generally have a bottom line, and there are ways to guarantee the bottom line. The safest is money market funds, but the returns are also the smallest, slightly higher than bank savings interest.
Stocks have no bottom, and a piece of bad news could cause them to drop by 90%, with a stampede effect. However, the gains in stocks are also very impressive. There are many types of stocks, including dividend-paying stocks like bonds.
There is no news about Bitcoin itself, which is impossible for ordinary bonds. There is almost no news about gold, unless a large gold mine is discovered somewhere. Therefore, there is almost no decline in Bitcoin caused by its own news. The rise and fall of Bitcoin is determined by the market supply and demand relationship. Since market environment risks still exist, various other news in the market will cause fluctuations in Bitcoin, so it has speculative value.
Bitcoin has a bottom, just like bonds. The bottom of Bitcoin is the computing power bottom. The computing power refers to the cost of calculating one Bitcoin. The current cost is about $30,000. The computing power bottom of Bitcoin is generated by competition. Every big rise in Bitcoin will cause the computing power to rise rapidly, resulting in a continuous increase in the computing power bottom. Another advantage of competition is that computing power is concentrated in the hands of teams with resource advantages, including financial advantages and energy advantages. When the price of the currency falls to the bottom of the computing power, large funds will buy it, because it is more cost-effective to buy Bitcoin directly than to mine Bitcoin yourself. At present, the computing power competition of Bitcoin has entered the national level, and waste energy has become the first choice. Competition will make the computing power profit tend to an average of 30% gross profit. When there is a gross profit of more than 30% at the bottom and the top, it will attract computing power investment. When the top exceeds the bottom by more than twice, computing power will flock in, accelerating the technical update of computing power equipment.
Bonds have a price ceiling, and you will be told how much money you will make in advance. Stocks have no ceiling, and you can make a lot of money if you choose the right one. For example, Nvidia's stock price doubled in 9 months, but what stock has this potential? Stock selection is not an easy task; Bitcoin also has no price ceiling, so it has the characteristics of stocks. Bitcoin and Nvidia are projects of the same magnitude, so can Nvidia still double? Compared with Bitcoin, it seems very difficult.
Why does Bitcoin have the potential to double?
Gold and Bitcoin have the most similar characteristics. Can gold still double? The current gold market is already in a balanced supply and demand market. If there is no major financial turmoil and it is just fighting inflation, there is no condition for a big rise. Bitcoin is different. There are two factors that contribute to its rise.
First, judging from the issuance of Bitcoin ETFs in the first 40 days, the amount of capital inflows increased by more than 10 times compared to the original Bitcoin market.
Second, it is the impact of the halving cycle. One day in April this year, the supply of Bitcoin began to halve, resulting in a decrease in supply.
The above two factors determine the rise of Bitcoin: the purchasing funds are 10 times larger, and the supply is reduced, making the doubling of the currency price almost a certain event.
In the previous two articles, "What is the basis for Bitcoin to rise to 3.3 trillion?" and "How high can Bitcoin rise after the United States approves ETFs?" (chainless.hk), it is explained in detail that Bitcoin will not only double, but will grow higher.
Isn’t the Bitcoin ETF, which has the security of a bond and the volatility and legality of a stock, the preferred financial product in 2024?
How to get returns comparable to Bitcoin in those days
In the future, Bitcoin will maintain a long-term upward trend, but no matter how good it is, it will not be as good as the benefits of Bitcoin in its early days. For Bitcoin to rise beyond gold in the long term, it needs a new narrative, further innovation, and connection to daily payments. Hal Finney, one of the founders of Bitcoin, commented on Bitcoin two days after its launch: "If Bitcoin succeeds and becomes the main payment system in the world, the total value of the currency should be equal to the world's wealth. Currently, based on estimates of the total number of households in the world, I have found that the wealth ranges from $100 trillion to $300 trillion. Corresponding to 20 million Bitcoins, the value of the coin is about $10 million." Hal Finney's vision requires Bitcoin to become the main payment system.
This is also the source of the design idea of DW20 Bitcoin standard. This idea has been formed in 2023. Bitcoin standard is the thinking of dual-track currency system. It means that the legal currency standard and Bitcoin standard develop in parallel and compete with each other. For the principle of Bitcoin standard, please refer to the article "Realization of DW20 Decentralized Standard Currency" on the chainless website (chainless.hk). Simply put, it is to give Bitcoin the scale it lacks, use Bitcoin to measure global economic development, and use DW20 to replace stablecoins for daily transactions. Bitcoin and DW20 together constitute a non-inflationary Bitcoin standard system.
The issuance principle of DW20 is the same as Bitcoin. It also needs a process from air to asset currency (stable currency). The difference is that DW20 adopts an unconditional airdrop method. Anyone who registers can receive the airdrop for free. The process from air to assets is a process of huge profits. Let us use DW20 to catch the bus of Bitcoin and help Bitcoin at the same time. The current DW20 is like the early Bitcoin. Only early participation can make profits. The earlier you register, the more likely you are to achieve a class leap. The era of Bitcoin's huge profits has been missed. DW20 must not be missed again. Give yourself a chance to get rich and receive airdrops at 0 cost! APP download link: https://eco.chainless.top/download?code=8613510870809VJ You will receive a big red envelope that will rise, which may rise to tens of thousands of dollars.
