Jiang Zhuoer: Bitcoin has brought monetary freedom, where will the next economic freedom be?
On May 29, Jiang Zhuoer, the founder of Lebit Mining Pool, gave a keynote speech on "The Next Bull Market" at the Bitdeer Mining Ecological Conference, expressing his years of observation and thinking in the currency and mining circles, as well as his understanding of the current situation. judgment of the situation. Odaily specially organizes it into an article for readers, and the article has been authorized by Jiang Zhuoer to publish.
In Jiang Zhuoer’s view, the source of the Bitcoin bull market is that Bitcoin creates economic freedom. Freedom secures transactions, and transactions create wealth.
Bitcoin bear markets are created by bull markets. When the bull market comes, the price rises irrationally and rapidly. For example, the first bull market of Bitcoin occurred in June 2011, and the cumulative increase in 60 days was nearly 300%. If the short-term rise is too fast for newcomers and new funds to enter the market, the currency price will collapse from the peak to the bottom, and the bear market will begin.
Bitcoin cannot escape the cycle law, but it has temporarily escaped the curse of "the volume is getting bigger and bigger, and the volatility will gradually decrease". We have seen that from the beginning of 2013 to the end of the year, Bitcoin rose from 80 to 8000, a 100-fold increase, and from 2016 to 2017, it also increased 100 times, from 1300 to 130,000. Why?
Jiang Zhuoer believes that this is the growth brought about by Bitcoin’s currency freedom and Ethereum’s equity freedom. Looking forward from the current node, it can be predicted that there will be new economic freedoms. The first is the freedom of fiat currency for stable coins; the second is that decentralized storage may bring about information freedom.
So how are we going to make money? Jiang Zhuoer said that we should focus on observing what provides new freedom, and then ensure that all our investments cover the frontier of economic freedom. This is also the theory of "Gaiquanyan" proposed by him. Simply put, it means that you can't just invest in Bitcoin, and some small currencies will rise even more in the next round of bull market.
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The following is the full text of the speech, enjoy:
What is driving the Bitcoin bull market?
The PPT of this speech is called "The Next Round of Bull Market", which was written in April. From the trend of currency prices in April and May, it can be seen that this round of bull market has begun, which belongs to the previous stage of the bull market.
To talk about the Bitcoin bull market or mining, we need to have an in-depth understanding of Bitcoin. The first question we must answer is why Bitcoin has a bull market.
In the past, most people in the society still didn’t have a full understanding of Bitcoin. They would think that Bitcoin is a scam. Now it’s a little better, and some people start to think that Bitcoin is a bubble speculative product with solid value support.
When we talk about Bitcoin, we will first talk about a basic economic principle. Although it is very basic, we have not had a deep understanding of it for five thousand years, that is——Trading can create wealth。
For example, suppose there is a farmer and a farmer's wife. The farmer is good at farming and the farmer's wife is good at weaving. When they have no business, they are forced to both farm and weave. Yield is 650 of the yellow part. If there is a transaction between them, that is, if there are businessmen to connect their production, they can only do farming or weaving, and everyone can do what they are good at, so his total output becomes up the green 1000.
These are important definitions, and we haven't fully appreciated them for thousands of years. In ancient times, industries were divided into "scholars, farmers, industry and commerce", and merchants were at the bottom; before the reform and opening up, there was a crime of speculation... But in fact, the transactions of merchants, like farming and weaving, actually create wealth.
Regulation is a major roadblock to free trade, especially unnecessary regulation. This picture is what Trump did when he came to power. The pile on the right is the current regulatory policy, and the small pile on the left is the regulatory policy in 1960. Trump said, I'm going to cut all the regulations and bring them back to 1960 levels. After Trump did these things, we can observe that the growth rate of the U.S. GDP has actually increased by 3%-4%. Our current GDP growth rate is only 6%, and the U.S. per capita GDP can still grow by 3%. Very surprising. By what? I think it depends on the wealth created by free exchange.
Wealth creation depends on freedom, so what can be used to protect freedom? Blockchain can create freedom. Blockchain is a decentralized technology. For example, Bitcoin now has more than 20,000 nodes in the world. If you want to eliminate Bitcoin, you must eliminate these nodes at the same time. Because it cannot be eliminated, freedom is created.
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A bear market is a tumor of a bull market
So how did the bear market of Bitcoin come about? Quite simply, a bear market is created by a bull market in Bitcoin.
We can simply understand the currency price composition of Bitcoin. The small red piece at the bottom is the use value of Bitcoin. Because Bitcoin brings economic freedom, Bitcoin will be used in some scenarios. For example, traders in cross-border trade can complete transaction settlement with Bitcoin in ten minutes , or some people don’t want their hoarded wealth to be diluted, they will switch to Bitcoin. They constitute the most basic bitcoin users, but there are not many of these users now. Let's assume that they have injected a unique use value into Bitcoin, and this is when something interesting happens.
Because the total amount of bitcoins is constant, some people will observe that more and more people use bitcoins, so they hoard bitcoins, sell them for a price, and sell them to those who need them when the demand rises. This is the stored value of the yellow part of the bitcoin, and these people pushed the value of bitcoin from one to ten.
The third wave is the emergence of speculators. They observed that Bitcoin continued to rise in a short period of time, hundreds of thousands of rises, and they came in to speculate. They have injected a huge amount of liquidity into Bitcoin, and fired Bitcoin from one dollar in terms of use value to one hundred dollars, and the bubble will burst.
We can mathematically and accurately describe this burst, which is the 60-day increase in currency prices.If the price rises slowly in a short period of time, new investors will gradually come in, which can support the price rise at this time. In the first half of the bull market from 2016 to 2017, we saw that the currency price rose slowly, and more and more people came in, but to a certain extent, they would enter an irrational state. Rising, rising too fast, exceeding the speed of newcomers entering the market, a bubble will appear at this time.
Let’s look at these points on the picture. The first one is the bubble in June 2011. It has risen by 300% on the 60th. If the short-term rise is too fast, newcomers and new funds will not have time to enter the market to keep up, and the currency price will collapse from the peak to the bottom. , the bear market begins.
This picture shows the bear market in 2011. It fell very badly, from $32 to $2, a drop of 93%. At that time, Bitcoin did not have any applications, and everyone was just using it for speculation. Next Many people feel that Bitcoin: it is going to die. No one expected that Bitcoin would recover again.
Bitcoin had two bull markets in 2013. This was the bull market in the first half of 2013, and the bear market that followed left a lot of people behind.
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How to grab the next 100 times coins?
Fortunately, now the signal of the bull market seems to be coming. Why is the currency price rising so fast now? It is generally believed that it may be because the market is halving the consumption in advance. The script has been played out twice (Bitcoin has experienced huge growth after the two halvings), and everyone knows that the halving will increase, so buying early will produce this effect of cutting and filling, leading to a rise in currency prices .
At that time, the method of predicting the currency price was to believe that Bitcoin had a cycle, and the second was to believe that as the volume of Bitcoin became larger and larger, its volatility would become smaller and smaller. But we have seen that from the beginning of 2013 to the end of the year, Bitcoin rose from 80 to 8,000, a 100-fold increase, and from 2016 to 2017, it also increased 100 times, from 1300 to 130,000. Why?
The first 100 times bull market of Bitcoin was due to the freedom of currency; the second 100 times was due to the emergence of a new freedom in the market, freedom of equity (that is, Ethereum). In the past, equity transactions were completed in the stock market and were strictly controlled. Ethereum has created a new method of fundraising, which can be completely unlimited and freely raise funds from all over the world. In the beginning this freedom brought a lot of deceit, and later this freedom brought new freedom and wealth.
This picture shows the number of active addresses of Ethereum in 2017. At that time, the number of active addresses was close to Bitcoin, so the total market value of Ethereum was close to 40% of Bitcoin at that time. This is a very amazing figure. It is conceivable that from Bitcoin to Ethereum, more and more products will appear in the blockchain world, as well as currencies that can provide economic freedom based on this.
Standing at the current node and looking into the future, we can predict that there are at least two economic freedoms. The first one is the freedom of fiat currencies in stablecoins。
The fiat currency was originally strictly controlled. It is difficult for the fiat currency of one country to invade the border of another country. Stablecoins can change all this. For example, if we want to open a US dollar account, we can only open it in Hong Kong. Going to Hong Kong to open a bank will require you to provide a lot of information or deposit hundreds of thousands of dollars in it to open an account. The cost is very high, but the emergence of stable currency USD or Japanese Yen stable currency can make the world The vast majority of people in the world can open a U.S. dollar account with a very cheap smartphone, and stablecoins may realize the currency competition theory.
The second decentralized storage has the potential to bring about freedom of information.
Although information on the Internet can be transmitted globally, it is not completely free, and information can still be strictly controlled. It is conceivable that people's demand for information liberalization is also huge.
So how are we going to make money? We should focus.
Human attention is very precious. We observe what provides new freedom, and we must ensure that all our investments cover the frontier of economic freedom. This is also the "Gaiquanyan" theory I put forward.
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"Don't hold for 5 minutes what you don't hold for 5 years"
What we need to control in investment is anti-fragility, less judgment and more risk control. Anti-fragility means that if you are the beneficiary party when the black swan appears, then you have anti-fragility. The currency circle can be called a black swan lake, we must have anti-fragility.
To give two examples, the first example is that some people only invest in Bitcoin (so they miss Ethereum). Why did Ethereum develop? This is worth thinking about. Because it offers new freedoms. So we want to cover the economic freedom proposed by everyone. It is for this reason that I developed the theory of "Gaiquanyan".
Another example is to only buy coins without mining. The income of hoarding coins is higher than that of mining. Why do we need to mine instead of just hoarding coins? Because hoarding coins is very difficult and the risk is high. The most reliable way is to develop a currency-centric business system, that is, to build our own business on the currency, and we absolutely do not take long-term short positions or long-term short currency.
Why is it difficult to hoard coins?To give a negative example, Duan Hongbin entered the market in the bull market in 2011, and bought from the front to the back in the bear market in 2011. When was Duan Hongbin thrown out of the car? He was thrown out in the bear market in 2013. At that time, he thought that Bitcoin would drop by 93%. He probably sold the currency when it was relatively high and sideways, and the currency fell. When he was still complacent, "I managed to escape", he thought. Then within half a year, the price of the currency rose sharply.
Many people know that I successfully escaped from the top in 2017. I sold all the coins at the beginning of December, and it seemed that the sales were not bad. In fact, I escaped from the top twice, not just once. At the beginning of the bull market in 2017, I wrote an article and made a prediction-the highest point of this round of bull market is 30,000. At that time, it was believed that the volatility of Bitcoin was not so large, and it was impossible to increase to a hundred times, so I made a prediction of twenty times. Then, in 2017, when the price of the currency was 30,000, I sold all the coins (the first escape from the top), and there were indeed obvious signs of a bubble at that time, and then the "9.4" regulation occurred. But just getting out of the car proved irrational. After "September 4", a large number of mining machines began to sell in a panic, and I bought all the money I got from escaping the top to buy mining machines. Later, everyone saw that the price of the currency rose to 130,000. Fortunately, I bought a mining machine to mine and get coins, so I really managed to escape the top at the peak of more than 100,000.
It is actually very difficult to build one's own business on the currency. A positive example is Zhao Dong. During the bear market in 2014, he lost his position because he added leverage to speculate on coins. He owed thousands to tens of thousands of coins at that time, and the price of the coins rose a hundred times later, but why did he pay off the price of the coins? According to It is common sense that he will never pay off his debts. But because he has done over-the-counter transactions, the business is related to the currency, so even if the currency price rises, his income will increase (he is part of the fixed withdrawal currency). In the end, Zhao Dong settled the thousands of coins he owed.
Again, it is very difficult to build a business on the currency. Zhao Dong is able to do on-site transactions because of his long-term accumulation. For most people, the easiest way to build a system is to buy a mining machine for mining. You put When the money is invested in mining, there will be continuous bitcoin output, which is equivalent to buying long-term options on bitcoin.
But now mining is becoming more and more specialized and group-oriented. There must be enough resources and a large enough volume to discuss cooperation with the local government and power stations to build mines. Retail investors cannot build large-scale mines by themselves. It is also very troublesome to buy dozens of mining machines to find a mine hosting site. BitDeer cloud computing power has made a very good product, which connects professional group miners and retail investors, and makes a transaction, which will create wealth.
Finally, LeBit is a professional mining service provider. Welcome everyone to mine in LeBit, thank you.
