Why is Bitcoin valuable and what is the nature of value?

The Bitcoin system written by a bunch of codes has gone from being worthless at the beginning to now reaching 100,000 yuan per coin. Since Bitcoin was issued in 2009, the return on investment has been 4.7363 million times.

So far, some people still think that virtual currency is a bubble, and sooner or later it will return to zero overnight. Some people regret that they didn’t drive in the morning and are ready to move. Which one are you?

What exactly is Bitcoin and why is it worth so much?

Everyone knows that the emergence of the Internet has brought the cost of information circulation close to zero. It is undeniable that the Internet has swallowed up the entire world. Ten or twenty years ago, it was difficult for us to imagine what form the Internet would develop in, which industries it would affect, and how it would affect it. It was difficult to predict. However, at that time, some people had a keen insight that the Internet was swallowing the world.

Similarly, the emergence of blockchain technology will make the circulation cost of value close to zero, which is the so-called Internet of Value.

For example, before the emergence of blockchain technology, if you want to buy something abroad, or foreigners want to come to China to buy something, it is simply to do business. Then you think, is it necessary to carry out cross-border transfers, exchange currency, and apply for the corresponding bank card of the other country? Are these procedures very troublesome?

Not to mention spending money, it is mainly time cost! Just like the line in Master Xing’s movie Shaolin Soccer said, “I’m hundreds of thousands of dollars per second”!

Hahaha, in short, the cost is very high.

Then after the emergence of blockchain technology, the value transmission medium based on token (Token), such as BTC, ETH, etc., does not respect national boundaries. It is enough for everyone to transfer Token, so the cost of value circulation is greatly reduced. Of course, this will involve foreign exchange control, and private individuals are still unable to do so.

However, this trend has already formed, and it has been implemented at the national level. I have to say that the high-level leaders are really far-sighted, issuing central bank digital currency and signing RCEP. This series of operations is really amazing!

Do you understand the real value behind Bitcoin? It is the blockchain technology behind it.

After understanding the essence of Bitcoin, you no longer only focus on currency price fluctuations. It can be said that the invention of Bitcoin has given people unlimited imagination. Of course, the value of Bitcoin is also determined by its demand. So who initially demanded Bitcoin? Consensus has been formed. When talking about this issue, let's first look at how consensus generates value.

Why is gold valuable and what is its nature?

Gold is due to its scarcity and relatively high mining costs, so gold, as a precious metal, has gradually been recognized by everyone. It used to be circulated as currency, but now it is used as a commodity, but there is still a general consensus on a global scale , Gold has now become a safe-haven product other than currency.

Why are diamonds valuable and what is their nature?

Due to its good hardness, diamond can be used for cutting and grinding. The Jews have spent several lifetimes turning stones into jewelry and making up a beautiful story. Let men all over the world give diamonds to their beloved girls as an eternal witness. Now that the whole world believes the lie, it has value.

Why are calligraphy and paintings so valuable, and what is their essence?

A painting by Leonardo da Vinci can fetch hundreds of millions of dollars. From the perspective of appreciation, the gap between fakes is not too big, and it does not hinder the value of appreciation. But because everyone thinks it is scarce, and generally famous paintings become more valuable the longer they are kept, so many people want to get them. If no one thinks these paintings are valuable, then who will pursue them?

What exactly is Bitcoin and why is it worth so much?

Why would someone spend money to buy equipment in the game, what is its essence?

People of the older generation may find it difficult to understand why they spend so much money on virtual equipment to play games, and a piece of equipment can still be worth so much money, because in the game world, it is very important for playing games. people have real needs. It's hard to understand for someone who hasn't played it. And many people still rely on this to make money, spending a lot of time to obtain equipment, and then sell the equipment to make a profit.

Why are roses so expensive on Valentine's Day, but there are still many people wanting them?

On Valentine's Day, many roses are several times more expensive than usual, and the demand is still very strong, because roses are endowed with a special meaning on Valentine's Day, which is not possessed by other flowers. Its value is appreciated by those who need it. approved.

The central idea of ​​these examples is one, that is, there is a group of people who recognize the value of this item. In fact, the essence of banknotes is the same. In everyone's consensus, if the product has specific value, then it has value, and it has nothing to do with the use, material, or shape of the item. We cannot understand the value of something simply because we do not belong to the consensus group for that thing.

So where is the value of Bitcoin? The initial circulation of Bitcoin was in the circle of technology geeks around the world, and it has accumulated a group of loyal fans. The Bitcoin system is a distributed and decentralized system. All Bitcoin transactions are stored in a ledger. This ledger is the blockchain, which is stored in everyone's computer, and its transfers are anonymous. Yes, since there is no central institution, there is no need to open an account, it is transferred through the address. Moreover, the circulation of Bitcoin is 21 million, and the issuance is reduced by half every 4 years. Its output is getting less and less, and the difficulty of output is getting higher and higher, so it has the attributes of deflation and scarcity.

Among the customers who used Bitcoin in the early days, there were a group of users in the gray area, such as cross-border transfers. Now the currency circulation between countries is still very troublesome, the transfer speed is slow, the handling fee is high, and it is transferred in many countries. Transfers are also severely limited.

This allows many people who do gray production to convert their local currency into bitcoin, and then sell the bitcoin and exchange it into the local currency of other countries, so as to achieve the purpose of transferring money, and the timeliness is high and the cost is high. Cheap and easy to operate. There are also arms, drugs, and black money, all of which can be laundered by Bitcoin. This is the earliest rigid demand for Bitcoin.

I think that a group of virtual currencies led by Bitcoin will exist for a long time as long as countries around the world do not collectively block this product after weighing the pros and cons. It will not replace the current legal currency, and it will exist independently of the legal currency. It does not belong to any country. Some virtual currencies are first reached by some people, and because of their value, they gradually form a wider circulation. More people reach this consensus, and finally have the value of existence.

Of course, most of the virtual currencies now have no value and are a kind of air currency. For a currency to exist for a long time, it must go through a long period of precipitation and historical tests, and its greater use value must be continuously excavated, so that it is a virtual currency with real value.

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Blockchain Note 19 - What is the essence of virtual currency value? - Earn coins

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