Bitcoin Ponzi

1. The concept of bitcoin was first proposed by Nakamoto in 2009. According to Nakamoto's idea, open source software was designed and released, and P2P network was built on it. Bitcoin is a kind of P2P digital currency. Point to point transmission means a decentralized payment system
unlike most currencies, bitcoin does not rely on specific currency institutions. It is generated by a large number of calculations based on specific algorithms. Bitcoin economy uses a distributed database composed of many nodes in the whole P2P network to confirm and record all transactions, and uses cryptography design to ensure the security of all aspects of currency circulation. The decentralized nature and algorithm of P2P can ensure that it is impossible to artificially manipulate the value of bitcoin through mass proction. The design based on cryptography can make bitcoin only be transferred or paid by the real owner. This also ensures the anonymity of money ownership and circulation transactions. The biggest difference between bitcoin and other virtual currencies is that the total amount of bitcoin is very limited and it has a strong scarcity. The monetary system used to have no more than 10.5 million in four years, after which the total number will be permanently limited to 21 million
bitcoin can be cashed and converted into the currency of most countries. Users can use bitcoin to buy some virtual items, such as clothes, hats and equipment in online games. As long as someone accepts it, they can also use bitcoin to buy real-life items[ 1-2]
on February 26, 2014, Joe Manchin, a Democratic senator from West Virginia, issued an open letter to a number of regulatory authorities of the US federal government, hoping that the relevant institutions would pay attention to the status quo of bitcoin's encouraging illegal activities and disrupting the financial order, and take action as soon as possible to completely ban the electronic currency.

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No, but it seems that it is difficult to explain in a few simple sentences. Let's study this ark article together

to expose the common myth of bitcoin

bitcoin has been established for more than 11 years and is striving to be widely recognized by institutions. Although constructive criticism is healthy, ark believes that some influential financial research institutions are refuting bitcoin based on outdated information, inconsistent arguments and flawed analysis

in view of Goldman Sachs' recent position on bitcoin, ark is reconsidering the most common misunderstanding, which has affected its acceptance. We look forward to participating in the health and ecational debate on bitcoin, as well as the important role we believe bitcoin should play in a diversified portfolio

According to ark, some influential financial research institutions are refuting bitcoin based on outdated information, inconsistent arguments and flawed analysis

statement: bitcoin is too volatile to serve as a store of value. Counterclaim
: the volatility of bitcoin highlights the credibility of its monetary policy

critics often point out that the volatility of bitcoin is the "value store transaction breaker". Why would anyone want to store the price of an asset in such drastic fluctuations in daily prices

we believe that these critics do not understand why bitcoin fluctuates and why its volatility may decrease

although the fluctuation of bitcoin distracts opponents from evaluating its role as a value storage tool, it actually highlights the credibility of its monetary policy. The impossible trinity is the dilemma of macroeconomic policy. As shown in the figure below, the dilemma assumes that when setting monetary targets, the decision-maker can satisfy two of the three goals instead of three, because the third goal is opposite to one of the first two goals

source: Fangzhou Investment Management Co., Ltd. in 2020, each side of the three difficulties triangle is mutually exclusive. For example, monetary authorities that choose a fixed exchange rate and allow free capital flow cannot control the growth of money supply. Similarly, the monetary authorities that choose fixed exchange rate and control currency can not accommodate the free flow of capital, and the monetary authorities that choose to accommodate the free flow of capital and control money supply can not determine the exchange rate

based on the three dilemmas, we can understand why volatility is the natural result of bitcoin monetary policy. Contrary to the modern central bank, it does not give priority to exchange rate stability. On the contrary, based on the quantitative rules of money, bitcoin limits the growth of money supply, allows the free flow of capital, and abandons the stable exchange rate. As a result, the price of bitcoin is a function of demand relative to its supply. Its volatility is not surprising

that is to say, over time, the volatility of bitcoin is decreasing, as shown below. With the increase of adoption rate, the marginal demand of bitcoin should account for a small proportion of its total network value, so as to rece the price fluctuation. If all other conditions are equal, for example, a new demand of $1 billion with a market value of $10 billion or a network value, the impact of the price of the bitcoin should be greater than a new demand of $1 billion with a network value of $100 billion. Importantly, we believe that volatility should not rule out the main reason why bitcoin is used as a store of value, mainly because it usually occurs at the same time as a sharp rise in price

source: Fangzhou Investment Management Co., Ltd., 2020. Source: coinmetrics

for a long time, the purchasing power of bitcoin has been greatly improved. For example, since 2011, the price of bitcoin has grown at a compound rate of about 200% per year. Although significant changes have taken place in the year, since 2014, the price of bitcoin has appreciated year by year at its lowest price. It's been a good year

source: Fangzhou Investment Management Co., Ltd., 2020. Source: Coinmetrics

claims: bitcoin bubble. Counterclaim
: bitcoin is a competitor for the role of global currency

, some economists like Nouriel Roubini (Nouriel Roubini) believe that bitcoin will suddenly disappear when it is in the bubble. The line of reasoning is that bitcoin has no intrinsic value, and its appreciation depends on speculation, such as a hot potato or tulip game, and the willingness of the "bigger fool" to pay a higher price. They believe that bitcoin is not an investable asset

we believe that this statement eliminates the reason why bitcoin has accumulated value over time. Yes, bitcoin doesn't behave like a traditional investable asset[ 1] The value of equity is determined by discounting the expected cash flow. Given the high future cash flow based on growth and / or investment capital gains, the stock appreciates independently of the shareholder base

However, monetary assets such as bitcoin are unproctive, and their appreciation depends on how they effectively maintain or increase their value over time. In a sense, the value proposition is cyclical: monetary assets will appreciate with the demand of more people, and if it is an effective monetary asset, more people will evaluate it. In other words, "money is a common illusion" and "money is valuable because others think it is valuable"

The claim that the value of money depends entirely on the common illusion, however, indicates that the form of money is arbitrary. In fact, according to monetary history, the most common and sustainable currencies have the quality of maintaining their demand. For example, for thousands of years, because of its scarcity, substitutability and rability, economists have regarded gold as the most successful form of money

we think that bitcoin is usually called digital gold, which not only has many characteristics of gold, but also can improve them. Although bitcoin is rare and rable, it also has the characteristics of divisibility, verifiability, portability and transferability. A series of monetary features of bitcoin endow it with outstanding utility, which is likely to promote demand, and believes that bitcoin is suitable for the role of global digital currency even if it is not superior

we believe that as a suitable competitor for the first batch of global digital currencies, bitcoin should at least attract demand similar to gold. However, contrary to the claim that it is in a huge bubble, the net value (or market value) of bitcoin is less than 2% of gold. p>

prediction is limited in nature, so it cannot be relied on

source: Fangzhou Investment Management Co., Ltd., 2020. Source: coinmetrics

statement: bitcoin will lose the value of fork and digital . Counterclaim
: the value of bitcoin cannot be copied only by software

in the digital field, goods are invisible and can be easily copied without destroying the original goods. Indivials can send word documents extensively by e-mail, for example, while retaining the original . Similarly, thousands of people can listen to a song simultaneously and repeatedly, which actually improves the value of the original work, especially when other songwriters imitate its unique voice

Bitcoin software is no exception. It's free and open source. Indivials can software, "create network branches" and create their own versions. However, skeptics still question how scarce bitcoin will be if it is based on open source software that can be copied indefinitely

first, the bifurcated bitcoin network will not create new bitcoin units, just as the expansion of Venezuela's Bolivar will not add dollars to the US monetary base. Instead, bifurcated bitcoin creates a new network with new units or coins. Although existing bitcoin holders have the right to use new coins, the forked network operates under a set of independent rules supported by a single stakeholder. Open source software does not dilute the money supply of the original network. It not only encourages cheap experiments and new networks, but also encourages new tokens and competitive markets

the scarcity of bitcoin is crucial to its network. Today, the number of bitcoins has reached 18 million, which is measured mathematically to 21 million, as shown below. Each bitcoin is linked to a wallet at a time and cannot be copied. Importantly, the only way to control user bitcoin is to have access to its associated private key

source: Fangzhou Investment Management Co., Ltd., 2020. Source: coinmetrics

so, when it forks, what makes 21 million units in bitcoin network more valuable than 21 million units in bitcoin cash (BCH) or BTC? To equate the value of bitcoin cash with the value of bitcoin is equivalent to assuming that Facebook's source code can "fork" and automatically the value of its 2.6 billion users and 50000 employees. Their value comes from the network effects of bitcoin and Facebook, not just their existence

as far as bitcoin is concerned, we believe that network effects include not only the efforts to protect the hash rate of the blockchain, but also the liquidity of bitcoin and the infrastructure supporting its adoption and use. If it is dilutive, then bifurcations will have to share bitcoin's computing power, users and liquidity. As shown below, bitcoin cash and other bifurcations do not seem to derail bitcoin's network effects

source: Fangzhou Investment Management Co., Ltd., 2020. Source: coinmetrics

claims that bitcoin is for criminals
counterclaim: bitcoin is anti censorship

critics still accuse bitcoin of allowing criminal activities because of its early evil activities. In its early years, bitcoin financed the Silk Road, an online black market platform known for selling illegal drugs

In our opinion, criticizing bitcoin for promoting criminal activities is one of its basic value propositions: censorship. As a neutral technology, bitcoin allows anyone to trade and cannot identify "criminals". It does not rely on centralized permissions to identify participants by name or IP address, but by encrypted digital key and address to distinguish participants, thus giving bitcoin powerful censorship ability. Anyone can trade anytime, anywhere as long as the participants pay the miners. Once secured, the transaction cannot be easily reversed

if criminal activities can be censored on the bitcoin network, then all activities can be censored. On the contrary, bitcoin allows anyone to exchange value globally and without permission. This is not to make it an inherent tool of crime. Phones, cars and the Internet are no less powerful than bitcoin in promoting crime

In other words, it seems that only a small part of bitcoin transactions are for illegal purposes. According to chainalysis, the number of bitcoin transactions related to illegal activities is still less than 1%, which may be a contribution to the transparency of bitcoin. Any user can view the complete history of transactions on the Internet, which shows that physical cash is a better means of illegal activities

3.

bitcoin has become one of the hottest topics at present. however, if we simply regard bitcoin's breakthrough of $30000 as a fraud, then some of them are relatively simple. After all, bitcoin is still of great value as the most valuable virtual currency. The blockchain behind it also represents another development direction. In fact, netizens have had a lot of discussions on this. I have also given other answers to such questions. If you like, you can have a look{ Third, how to look at the future development of bitcoin

in my opinion, after this soaring, bitcoin may usher in a slump in the future. So I hope you can look at such an event rationally. And for those who invest in bitcoin, they also hope that they can treat it rationally. After all, the price of bitcoin has reached the point that ordinary people can't accept. Most importantly, I hope you can understand that we have never acknowledged bitcoin from the beginning to the end

4. no Let's talk about the Ponzi scheme first. In short, Ponzi scheme is a kind of investment fraud. Many illegal pyramid schemes use this method to collect money. As the saying goes, it is "robbing the east to pay the west" and "cheating the white wolf with empty hands". Using the money of new investors to pay interest and short-term return to old investors, in order to create the illusion of making money, and then cheat more investment. Because of the early investment returns are rich, so you can continue to attract new people to come in to take the offer. Some time ago, a lot of P2P companies were Ponzi schemes. When the makers made a lot of money, they ran away and the investors lost all their money. Why, however, is bitcoin not a Ponzi scheme? The definition of the basic attributes of money in Economics: 1. Medium of exchange 2. Means of storage 3. Measure of value. Digital currency itself is the same as RMB and US dollar, that is, they do not exist naturally, because many people believe in it, and then set up order. Their essence is endowed with value by consensus group, because many people believe it is valuable. As bitcoin becomes more and more important as a measure of exchange and value, bitcoin will become the same status as today's legal currency, just like wechat payment E-wallet. Ten years ago, can you believe it or use it? However, no matter what you invest in, you should know that all financial instruments have risks, just as RMB and US dollar also have foreign exchange risks and depreciation risks. At the same time, we should choose a regular exchange. At present, there are many small exchanges for trading virtual currency, which are easy to be attacked by hackers. If it happens, it will cause heavy losses. At present, the mainstream bitcoin trades all Qube, okex, fire coin and so on. It's better to use a large exchange to ensure the security. Just like the difference between the four major state-owned banks and small banks, there is no user run in the former, even if there is a risk reserve, and once a run occurs in a small bank, it will go bankrupt.

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6. It's better to find your own manufacturer. Now, there are very few refitted cars imported from China. Except for official refitted cars like Mercedes Benz's AMG and Bosu, there are very few imported cars like Oz and ABT. I suggest you buy a high 6 and then change them yourself. Abt kits are sold in China, and those for G6 should come out soon.

7. In order to develop offline procts and promise huge profits, it is pyramid selling

pyramid selling is an illegal act. If the circumstances are serious, it is suspected of a crime

for those who are cheated in MLM, it is difficult to recover the losses because most of the money they pay is wasted

to prevent pyramid selling, we should be careful of our relatives and friends.

8. Bitcoin itself is only a proct of technology, and its price is also the birth of speculation, which does not meet the definition of Ponzi scheme

9. Technology is not guilty< Since you are a developer of counterfeit currency, you should have mature logic
how does the conclusion "bitcoin is a Ponzi scheme" hold
the Internet is also very easy to cheat people. The Internet can be used to publicize, operate and collect money. Why not ban it
mobile communication networks are also easy to cheat people, such as SMS fraud, telephone fraud and harassing phone calls. Why not ban them?