Editor: Shen Chong
Source: Tencent Technology (ID: )
"Theoretically Satoshi Nakamoto is already the richest man in the world."
Just two months ago, when the price of Bitcoin exceeded $50,000, Meituan founder Wang Xing spoke on Fanfou on February 16. Satoshi Nakamoto is recognized as the father of Bitcoin and owns 1.12 million Bitcoins.
Just two months after Wang Xing's speech, the price of Bitcoin rose by another 30%, exceeding US$64,000.
Bitcoin’s wealth creation myth goes far beyond that. On Wednesday, the largest digital currency exchange in the United States went public, with its first-day closing price reaching $65.4 billion, surpassing China's largest brokerage CITIC Securities.
Wang Xing is a supporter of Bitcoin. At the end of 2013, Wang Xing purchased Bitcoin to "pay tribute to this extraordinary imaginative creation with practical actions."
The investment brought about a hundredfold return, even more than Meituan, one of China's most successful technology companies over the past decade.
Bitcoin is viewed as a currency that can be used as a store of wealth and payment, just like gold. Few of China’s Bitcoin supporters come from the financial industry. Most supporters, such as Wang Xing, come from the Internet.
Xu Zhihong, a partner of Biyou, is one of the earliest investors in China to invest in Chinese concept stocks. More than ten years ago, he told brokers that he wanted to buy stocks in Sina and NetEase. The Americans who received him were full of confusion - are all Chinese investing in Chinese concept stocks?
In 2013, Xu Zhihong received a wedding invitation from a friend. Unlike previous big red envelopes, this time he prepared a special gift - a Bitcoin worth about US$300.
"You should keep this Bitcoin until your child gets married and can buy a house in Beijing." After giving it away, Xu Zhihong was worried and asked his friends to hold it for a long time.
While the price of friendship has remained stable over the past decade, the price of Bitcoin has soared. Today, no one gives Bitcoin as a wedding gift to friends anymore.
"Bitcoin will soon (within 1.5-2 years) approach 80% of the gold market value, which means each Bitcoin is worth US$400,000." Kuai founder Chen Weixing predicted. After merging with Didi, Chen Weixing devoted himself to the blockchain and founded a chain taxi company. As Bitcoin has risen, similar predictions have grown.
If all the gold in the world were added together, a cube with a side length of 21 meters would have a market value of approximately $11 trillion. Bitcoin is called digital gold, and its total market value is equivalent to 10% of gold.
We can’t help but ask, what is the force that supports Bitcoin from being a token that no one cares about to achieving unparalleled epic success step by step?
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Man who saved Bitcoin goes to jail
Compared with the glory of Bitcoin today, its birth is simply insignificant.
On January 3, 2009, Satoshi Nakamoto personally created the first block, the genesis block of Bitcoin, on a small server in Helsinki, Finland, and received the first money automatically generated by the system. With a reward of 50 Bitcoins, the first Bitcoin was born.
For a long time, the world ignored this new invention—what was it really used for? Satoshi Nakamoto, a recognized genius, did not answer. In December 2010, Satoshi Nakamoto left his last message online and never appeared again.
For the first year or two of its existence, Bitcoin remained at $0.1 per coin. The famous story of exchanging 10,000 Bitcoins for pizza happened at this time. Bitcoin has a genius design, but it's a useless design.
Satoshi Nakamoto is like Shakespeare, writing a perfect play but no one can act it. Until Bitcoin met another "genius".
Ross Ulbricht (Ross) was born in 1984 and has been engaged in drug trafficking since college. The U.S. government has very strict drug control, and Ross has never been able to make his drug manufacturing and trafficking business bigger and stronger. It wasn’t until 2010 that Ross heard about Bitcoin’s existence from customers, which became a turning point.
The core of the government's crackdown on illegal activities is capital supervision - and the core behind this is the banking system that is firmly in the hands of the government. Bitcoin is a payment instrument that is independent of the banking system - until now, banks and Bitcoin have still gone their separate ways.
In January 2011, Ross, who was only 26 years old, founded the "Deep Web", commonly known as the Dark Web. Ross named the site Silk Road, meaning the place where goods were traded.
The Silk Road did not trade tea, silk or porcelain. It is the most famous and notorious "dark web" in history. The main trading objects of this website are drugs, sex slaves, child pornography, private killers, arms trading, and identity fraud.
All illegal trade converged on the Silk Road. Eventually, even Ross himself became involved. He once paid a high deposit to hire a hitman to kill a Canadian user who hacked into the seller's computer and blackmailed him.
With the rise of the Silk Road, Bitcoin finally found its first application scenario - a payment tool for sinful transactions. Data shows that the Silk Road once circulated more than 9.5 million Bitcoins, accounting for 80% of the Bitcoin circulation at that time.
Silk Road website screenshot
In August 2013, Ross was arrested at a San Francisco public library. In 2015, he was sentenced to life imprisonment without the possibility of early parole by the court.
Black people’s needs are demands. Like a fool's consensus, it's a consensus. Driven by criminal transactions, Bitcoin experienced its first surge, reaching $31 in June 2011. Two months after Rose's arrest, Bitcoin climbed to $1,100 per coin.
It’s safe to say that Ross is an extremely important figure in the history of Bitcoin. When Bitcoin is about to be ignored by the world, it ends the history of Bitcoin as a toy and gives it a real-world meaning - serving crime.
“Criminals are the most capable of accepting new technologies.” Xu Zhihong, a partner at Biyou, concluded. But in the long battle, the police department mastered the technology of Bitcoin traceability. More black transactions are turning to harder-to-trace digital currencies like Monero. Bitcoin has embarked on a long bearish journey that has spanned several years.
This bull run is sowing the seeds of Bitcoin around the world. On the other side of the ocean, in China, a Bitcoin trading platform called Bitcoin Trading Platform was quietly established. This exchange, known as the Huangpu Military Academy in the Chinese currency circle, was founded by Xu Mingxing. Like Wang Xing, Xu Mingxing also comes from the Internet industry. He served as Chief Technology Officer.
There are many people who do the same thing as Xu Mingxing. They are grappling with another fundamental need—how to make Bitcoin more accessible to ordinary investors.
Digital currency exchange—the greatest bridge
There is a huge technological gap between the digital currency and fiat currency worlds, like a huge river. Before the birth of exchanges, investors needed to swim naked to the other side and bear various trading risks. This is destined to be a game that only a few people can participate in.
Miners have to pay electricity bills, mining companies have to develop more advanced machines, and development teams need maintenance, all of which require money - Bitcoin needs more support from the fiat currency world, which is a matter of life and death.
After Bitcoin’s first big bull market, digital currency exchanges began to flourish. , Huobi, Binance, , , , , and other exchanges began to rise.
Cryptocurrency exchanges provide a bridge where investors can buy Bitcoin as easily as opening a stock account. For quite some time, digital currency exchanges were the only place where the public could purchase Bitcoin.
No matter how Bitcoin rises or falls later, wealth from the legal currency world continues to flow into the digital currency world, supporting the transaction price of Bitcoin, and various innovations in the digital currency field continue.
Communication poster. The “marketing level” of the currency circle is undoubtedly first-rate. Since its birth, the exchange has been developing customers in the fiat currency world through various methods.
Most of the exchange's customers are investors who like new things and high-risk investments. But for Bitcoin to truly enter the real world and the general public, more financial innovation is needed.
Bitcoin ATMs make it easier for investors to buy Bitcoin, which is one of the main directions of innovation in the digital currency world.
Bitcoin rejected by institutions
Bitcoin supporters often mention the word "faith." Only those investors with "faith" can step on thorns, go through bulls and bears, hold Bitcoin, and gain huge wealth.
Those who set up exchanges to make it easier for investors to buy Bitcoin are more like human evangelists. Do they have confidence in digital currencies?
I'm afraid this is difficult to answer, and the founder of the exchange does not necessarily need it - because the exchange (du) exchange (chang) is indeed a very profitable business. Thanks to the efforts of the exchange, the goal of Bitcoin entering personal and ordinary household accounts was quickly achieved.
There are two bigger peaks ahead of Bitcoin - how to enter the investment portfolios of mainstream financial institutions, and how to enter the balance sheets of listed companies - which are very difficult.
Bitcoin is like Sun Wukong, popping out of the stone. It is unlike all asset classes and incompatible with modern financial institutions. Bitcoin’s market capitalization is already comparable to that of silver, but you can’t keep it in a bank account.
Over the past decade, Bitcoin has been the most heavily invested category in the world – rising from $0.1 to $64,000. Unfortunately, such investment products have been ignored for ten years, and almost all investment institutions in the world have missed it.
"Currently, most financial institutions and banks are unable to purchase Bitcoin, and it will take a long time to further form a consensus." Zhu Xiaohu of Jinshajiang Venture Capital told Tencent Technology that he has invested in a series of cutting-edge technologies such as Didi, Ofo, and Inke. company. Wherever there is a vent, there is him.
"Currently, the biggest limitation for institutions to participate in Bitcoin investment is the financial supervision of various countries." Yuan Yuming, CEO of Huolian Technology, said. In 2018, Yuan Yuming, who is still the chief analyst of TMT of Industrial Securities, announced that he would switch jobs to join Huobi China, causing a sensation in the industry.
When asked why this new round of market conditions occurred, almost all practitioners in the currency circle gave the same answer—the United States.
"The center of blockchain innovation has always been in the United States, but the innovations of blockchain and Ethereum in the past two years have basically nothing to do with China." Chen Yong, founder of Biyou, believes that when he entered the currency circle to start a business, he had previously served as a senior executive at Cheetah Mobile Vice President. “The situation based on American financial innovation remains unchangeable.”
Finance and technology are the two cornerstones of American prosperity. Wall Street and Silicon Valley have not stood aside during Bitcoin’s astonishing rise, but have been deeply involved.
Wall Street and Bitcoin
An American asset management company that breaks the boundaries between the digital currency world and traditional finance - commonly known as Grayscale Fund in the industry.
In the world of Bitcoin, a person who owns 1,000 Bitcoins is called a whale. There are approximately 2,000 whales in the world.
Of all the whales, Grayscale Fund is undoubtedly one of the largest – it manages over 650,000 Bitcoins. At current prices, Grayscale has at least US$38.5 billion in assets, which is enough to rank among the most successful asset management companies in the world.
Grayscale Fund founder Barry Hilbert
Through innovation in financial products, Grayscale Fund has reduced the difficulty of purchasing Bitcoin assets to the same level as purchasing U.S. stocks for the first time. As long as you have a US stock account, you can trade GBTC just like buying and selling stocks. You don’t have to consider complicated deposit procedures, nor do you have to worry about platform thunder.
For a long time, Grayscale Fund has continued to grow at a scale of 2,000 Bitcoins per day, and its scale has expanded rapidly. Its innovation is very simple. A crypto-asset trust fund is established to hold Bitcoin, and investors hold trust shares that can be traded in the secondary market.
"There are currently two main ways for U.S. institutions to directly participate in Bitcoin investment. One is to purchase stocks through trust fund products (ETP) operated by institutions such as Grayscale, and the other is to purchase directly through compliance trading platforms such as Baidu." Yuan Yuming said.
In the United States, annual management fees for trust funds are generally 0.3-1.5%. Grayscale products have annual management fees of 2% to 2.5%. Even if Grayscale Fund does nothing, it can withdraw tens of thousands of Bitcoins in management fees every year.
Grayscale Fund is typical of all Bitcoin startups. Make it easier for more investors to hold Bitcoin and earn huge returns. The profit-seeking behavior of these financial institutions has brought a steady stream of investors to Bitcoin, driving Bitcoin to continue to rise.
"Bitcoin is an 'extremely inefficient way' to conduct transactions, and the energy consumed in processing these transactions is staggering." U.S. Treasury Secretary Yellen once lambasted Bitcoin, "Bitcoin is often used for illegal financing, and investors Be careful.”
Although Yellen does not like Bitcoin, this does not affect the financial innovation of Bitcoin in the United States. In September 2017, the People's Bank of China and seven ministries jointly banned ICOs. But three months later, CME launched Bitcoin futures.
Today, the world's top asset management institutions such as Bridgewater and BlackRock are eager to try. Financial institutions can use your money to purchase any asset for a management fee.
Silicon Valley and Bitcoin
The founder of Jack is a well-known American technology leader. He is also a stronger cryptocurrency advocate than Musk. He believes that cryptocurrencies will become the world’s “single currency.”
Although no one knows it, it wasn't the most successful business company Dorsey founded. The company is a pioneer in Bitcoin innovation and currently has a market capitalization of $120 billion, twice that of Bitcoin.
If the Grayscale Fund is like a water pump, pumping water from the legal currency world to the Bitcoin world. Silicon Valley tech companies invent new tools to eat up Bitcoin stocks like ants moving.
In January 2018, its Cash App launched a new feature that allows users to purchase Bitcoin. "A total of 3 million people purchased Bitcoin through Cash App in 2020, and 1 million new people were added in January 2021." Data disclosed by the CFO shows that Bitcoin is entering the wallets of the general public through various methods.
Due to pressure from competitors, in October 2020, the world's most important online payment tool announced that it would support the purchase of digital currencies such as Bitcoin and Litecoin.
On the one hand, the Federal Reserve provides a steady flood, while traditional U.S. financial firms and technology companies act as water pipes for fiat and digital currencies—making buying Bitcoin as easy as turning on the water pipes at home.
Too many new investors, not enough Bitcoin anymore
One Bitcoin is worth US$60,000, which is equivalent to more than 400,000 RMB. The annual income of the vast majority of ordinary people in the world can no longer afford to buy a single Bitcoin.
But that doesn’t stop Bitcoin from being in short supply. According to Satoshi Nakamoto’s settings, the total number of Bitcoins is 21 million, of which approximately 18.6 million have been mined.
"Due to the early low currency prices, a large number of Bitcoins were lost, and it is estimated that 3 to 4 million will never be recovered." Cryptocurrency analyst Xu Qing'an said.
According to the rules, 328,500 new Bitcoins are now mined every year. Every four years, Bitcoin mining output drops by half and mining difficulty doubles.
"The inflation rate of gold is only 1.7%, and the inflation rate of Bitcoin is almost 1.7%. As Bitcoin halves, the inflation rate of Bitcoin will become lower and lower." Xu Qing'an believes that buying Bitcoin will become more and more expensive. The harder it is. big.
There are more and more customers withdrawing coins, and the number of Bitcoins on the exchange is getting smaller and smaller.
Research shows that the number of Bitcoins held on exchanges fell by 800,000 last year, from 3 million to 2.2 million. The number of Bitcoins stored on exchanges continues to decrease.
If the number of Bitcoins on exchanges continues to decrease, the difficulty of purchasing Bitcoin will increase. Off the market, there is still a larger group of predators buying Bitcoin.
In February 2021, Tesla announced that it had purchased $1.5 billion worth of Bitcoin and announced that Tesla cars could be purchased with Bitcoin. The price of Bitcoin instantly rose by 10%.
Musk also announced that customers will be able to buy Tesla cars with Bitcoin and Tesla will not sell Bitcoin.
Tesla isn't the first tech company in the world to try its luck. In 2020, it invested approximately US$50 million to purchase 4,709 BTC. This attempt allowed Bitcoin to appear on a U.S.-listed balance sheet for the first time and be recognized by accounting standards.
Another most direct example is (). Since August 2020, they have raised funds through their own cash and the issuance of convertible bonds, and have continued to purchase more than 70,000 Bitcoins, costing more than US$1.1 billion.
China’s Meitu also purchased $100 million in Bitcoin and Ethereum and is one of the few companies in China to publicly hold Bitcoin.
The number of Bitcoins is limited, but the demand is constantly increasing, resulting in an increasingly serious contradiction between supply and demand.
Where is the sky for Bitcoin?
The friend who received Bitcoin as a wedding gift at the beginning of the article finally handed over his chips after Bitcoin increased tenfold. New investors are repeating the Bitcoin rally story.
Grayscale Fund, Binance, Huobi, and all the entrepreneurs broadening the fiat world and connecting it with the digital Huobi world have been richly rewarded.
New financial innovation never stops. The world's first Bitcoin ETF has been listed in Canada, with a scale of 17,000 Bitcoins, and more than 10 Bitcoin ETFs are waiting in line for listing.
Can I still buy Bitcoin?
"You can use Bitcoin to buy a small part of the asset, which is an asset allocation worth considering." Zhu Xiaohu of Jinshajiang Venture Capital said cautiously.
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