Another June is here. As BTC hovers around 66k, Liu Jiaolian convened a mid-year review and outlook meeting for VIP members to look back and plan ahead (see {6.16 internal reference: mid-year private board meeting, deep discussion on value closed loop}).
During the meeting, Liu Jiaolian analyzed the fundamental value of BTC, as well as the widely borrowed “meme” concept by altcoins and meme coins, such as concepts like “fair launch” and “decentralization”, exploring the essential differences. Extending from this, the discussion delved into why BTC is irreplaceable as a value store and “unit of account”. Furthermore, Liu Jiaolian presented unconventional views on the future development direction of so-called blockchain technology or smart chains.
Understanding this, one can easily see through common misleading rhetoric in the industry:
1. Look at this coin, it adopts a “fair launch”, no pre-mining, no front-running, no internal distribution, everyone starts together, mining begins simultaneously, truly 100% generated by the community, just as fair as BTC! Therefore, it is “highly valuable”.
2. Look at this chain, it uses an advanced PoS (Proof-of-Stake) consensus mechanism, not only more environmentally friendly than BTC’s PoW (Proof-of-Work), but research papers prove that it is more secure and decentralized than BTC’s PoW! Therefore, it is “100% valuable”, even “more valuable” than BTC.
3. Look at this memecoin, with a limited total supply, no inflation, smart contract code written in stone, on-chain verification, no one can tamper with or increase supply, directly reaching the final state of BTC’s inflation end in 2140; furthermore, it may even have not only a limited supply but also more powerful “burning and destruction”, not only “no inflation” but also “continuous deflation”, making it even “harder” and “scarcer” than BTC! Therefore, it is “extremely valuable”, truly an invincible entity “to the moon”.
And many more, not listed here.
You will notice that these rhetorics all borrow one attractive aspect of BTC, a factor worth emulating, extract it as a “meme”, and then promote their own products with the same “meme”, thereby deceiving others with the “meme” of BTC and selling their own junk coins, ultimately aiming to “cheat” others out of their BTC or stablecoins.
In Liu Jiaolian’s view, the starting point of BTC’s value, or rather the source of value, is not these characteristics, these memes, or these attractive features, but rather the Proof-of-Work (PoW).
Or to go further, it is the energy consumed by PoW. If viewed from the subjective value judgment of some people, it can also be seen as “wasteful” energy.
Yes, the value of BTC lies precisely in the “waste” of energy in its production process, a “wasteful” value.
Is it hard to understand? In fact, from a different perspective, it is not difficult to understand.
All human activities inevitably consume energy. Making steamed buns consumes energy, building cars consumes energy, launching rockets consumes energy, even watching a video consumes energy…
But why don’t we define these energy consumptions as “waste” of energy? Because it is merely a value judgment made from a human standpoint.
From the perspective of a pig, the energy humans consume to watch videos or launch rockets is undoubtedly considered “wasteful”.
To Sun Wukong who can cloud-travel, the energy humans consume to build cars is also considered “wasteful”.
To an immortal or deity who can live forever without eating grains, the energy humans expend growing wheat and steaming buns is quite “wasteful”, damaging the universal environment, accelerating universal entropy increase, hastening universal destruction…
From the standpoint of a product that cannot be eaten, worn, or satisfy any of human’s physiological or psychological needs, BTC is indeed easier for people to subjectively consider as a kind of “waste”, and a “pure waste” at that.
However, from the perspective of human societal cooperation and division of labor, from the standpoint of human civilization development, this enormous “pure waste” is actually a very necessary and valuable waste!
Because as human economic activities become more intertwined, human civilization reaches a higher level, and humans continually develop their mastery of energy (the cosmic civilization metric is the utilization rate of energy in the galaxy), the complex economic activities of human society, as mentioned earlier, each economic activity is in essence a “waste” of cosmic energy, exchanging it for something useful to humans, satisfying human needs, inevitably calling for a standard, pure “waste” to compare and measure the “waste” of energy in all these economic activities, thereby guiding individuals in free exchange activities to evaluate and grasp the relative value and exchange relationships of their products (commodities).
This scale of energy consumption is the measure of economic value. Just as “meter” is the measure of length, “kilogram” is the measure of weight, BTC is the measure of all economic value.
In a previous article, Liu Jiaolian shared a cartoon version of “Bitcoin Science in Five Minutes” (2024.4.27), for those who have forgotten, you can revisit it. It mentioned that in the early stages of human civilization, people used carefully polished shells as currency. The principle was that polishing shells required human effort, and when using shells to exchange other labor products, such as fish or grains, it served as a unified standard to evaluate and measure the time and effort spent on all other productive labor.
Today, we have evolved into the era of fiat currencies.
Readers may ask, why can’t this thing used as money be manufactured at zero cost or low cost, like paper money, meme coins, PoS coins, and must be something like shells from ancient times, gold from later periods, or BTC today, which require massive human labor and energy to produce? Because only established (historical), irreversible physical, and naturally objective energy consumption has the qualifications to be compared with other energy consumption processes. In the eyes of a deity, all banknotes printed without “wasting” energy, with value artificially assigned by humans (corresponding to a certain amount of energy consumption, but in reality not actually), engaging in so-called “equivalent exchange” (which is far from equivalent) with products produced by actual energy consumption processes through mandatory means, is the greatest illusion.
And a production process that does not produce any practical value, the purest form of energy “consumption” or “net waste”, BTC’s production process, whose product can condense into a product BTC, then this product is the most suitable as a measure of the value of all energy consumption or “waste” processes.
Therefore, BTC’s “net waste” is not a waste, but a value. Just as Satoshi Nakamoto said, “not having bitcoin is a net waste”.
Before the arrival of the information age, there was a famous argument: money is not naturally gold, but gold is naturally money.
After the arrival of the information age, we can perhaps argue: money is not naturally BTC, but BTC is naturally money (the measure of value). The key is the word “naturally”.
The apparent value of fiat currency, rather than being a value of accounting, is more like the value of “violence” forcing people to accept it.
Therefore, why is it impossible to replace BTC? (Unless it self-destructs, evolves with major mistakes, such as abandoning PoW and switching to PoS, hehe)
Because energy “consumption” or “waste” is a thermodynamic one-way process, irreversible, spilled water, irretrievable. Most importantly, it’s massive!
The annual electricity consumed globally in producing BTC exceeds the electricity consumption of many small countries. The actual gold and silver spent surpass the military budget of many small countries and rank among the top 30 in the world. Billions of dollars are being “wasted” every year. For data on this, you can refer to Liu Jiaolian’s article “Bitcoin’s ‘Military Spending'” dated 2024.5.19.
As long as BTC does not collapse, the rational choice of human society is to not abandon the established “waste” of BTC, start over, spend billions of dollars and over a decade, and “waste” enormous energy just to create an alternative that may not be much better than BTC, or at least unlikely to be a tier above BTC like gold.
Compared to that, the difficulty of starting over with a memecoin and the cost of turning “waste” into actual “waste” is very small in Liu Jiaolian’s view, extremely small, really too small. Usually unlikely to exceed $10 million.
Compared to starting over with a PoS chain, the difficulty of forking a new chain, and the cost of eliminating and “wasting” the old PoS chain is not very large either in Liu Jiaolian’s opinion. Usually it will not exceed $1 billion. Not even 1/10 of BTC’s annual “net waste”.
So, why are copycats just that, and memes just memes, even if they closely mimic BTC, seemingly “better”? Seeing through the essence behind all this imitation, the cost of imitation is very small, and you will see clearly, all these superficial articles are paper-thin facades, deceiving ghosts, devoid of value. At least, the value is far less than what their promoters claim.
As for surpassing BTC, outperforming BTC, hehe, who believes that is the fool? – Unless it can prove that every year it “wastes” much more energy than BTC! And this is almost impossible! BTC has already faced criticism and repression for its “net waste”, can you create something unproven that “wastes” much more energy and real gold and silver than BTC? Which country or region would allow such a thing to exist and develop?
The conclusion is clear: BTC is irreplaceable.
Understanding the above questions, returning to the surface, back to the “meme”, in fact, all these “features” are just means to preserve the value forged by the “net waste” of PoW.
Yes. PoW is the root of value. Everything else, token issuance formulas (models), decentralization, and so on, are all means to preserve these values for the longest time. PoW (Proof-of-Work) is the soul of BTC.
The starting point of BTC’s value is PoW, which absorbs negative entropy from the natural universe, passes through a series of cleverly designed methods to avoid value dissipation, and allows for an infinitely long shelf life, such as constant total issuance, decentralization, etc., finally reaching the end point, being encapsulated in the value storage symbol BTC. This is the closed loop of BTC’s value movement.
(Public account: Liu Jiaolian. Knowledge planet: reply “planet” to the public account)
(Disclaimer: The content of this article does not constitute any investment advice. Cryptocurrencies are highly risky assets with the risk of going to zero at any time. Please participate cautiously and take responsibility for yourself.)
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