Yesterday, the internal reference “Futures Betting on BTC at $100,000 in September, Beware of Whale Selling Risks” reported on gold. The spot price of gold is over $2,300, multiplied by the ratio of kilograms to troy ounces, which is approximately $74,000 per kilogram. BTC (Bitcoin) has temporarily dropped from $74,000 to around $62,000, a difference of less than 20% compared to one kilogram of gold.
In history, BTC has briefly equaled or even exceeded the value of one kilogram of gold during the two bull peaks in 2021.
In this halving cycle, the scarcity (or rarity) of BTC has surpassed that of gold, and it is about to compete with the most globally recognized hard currency on this blue planet (refer to the article “The 2024 Singularity is Coming: Humanity is Not Ready to Embrace Assets with an S2F of Over 100” on the Liu Jiaolian website on February 17, 2023, and the article “Bitcoin’s Halving” on April 20, 2024).
In the end, who will win? To consider this question, we need to fully understand the birth and evolution process of currency. Several slides drawn by Anil, a netizen, help us quickly understand this issue.
Initially, when there was no currency available, we used “barter” trade.
In fact, as you can see in recent years, we have signed a large number of currency swap agreements with many countries. In essence, this is a barter trade conducted when the US dollar does not exist. This is a precautionary measure for the exit of the US dollar hegemony from the historical stage.
However, barter trade has an obvious problem, which is the problem of combinatorial explosion. Even for the case of only 6 items as follows:
If they are exchanged pairwise, there will be as many as 15 “exchange rates”.
However, as mentioned by Liu Jiaolian above, currency swap agreements can greatly alleviate the problem of combinatorial explosion. The fiat currencies of the currency swap agreement act as “agents”. However, the participating countries in the swap need to determine the exchange rate between each pair of countries.
If there is a particularly dominant country in the entire currency swap network, which is the main trading partner of other countries, it will further simplify into a “bus” structure, where the dominant country only needs to sign swap agreements with other countries one by one. In this way, the number of agreements (network connections) will be further reduced to the number of signatory countries.
In fact, the evolution from barter trade to general equivalent has similar logic, but the general equivalent is simpler and more convenient than currency swap agreements. However, global consensus is not easily established.
So, what characteristics should a commodity have to be selected as a general equivalent?
It is generally believed that the following characteristics are very important:
1. Scarcity. It is very difficult to produce and can resist artificial manipulation and devaluation of supply.
2. Divisibility. It can be combined or divided at any scale.
3. Portability. It has a high value density and is very easy to move in space.
4. Durability. It does not wear out and lasts a long time (i.e., it is easy to move in time).
5. Identifiability. It is easy to identify authenticity, and anyone can easily verify its value.
A general equivalent with these characteristics can perform the functions of money.
In order to find the optimal currency, people have used these key criteria to examine all commodities throughout history.
The primary question is, we must ask ourselves, which one is the best choice for storing value? If you choose the wrong value storage, you will become poorer relative to those who make the right choice.
People will continue to repeat this comparison and screening process until they find the ultimate winner.
You might think: I have never actively made a choice. The currency has always been there.
This is exactly why it has become more important than ever to break free from the old trick of fiat currency. The old trick has been tried and failed with hyperinflation in one place after another around the world.
Three factors ensure the monopoly of currency: 1. Physical boundaries; 2. Capital control; 3. Fiat currency laws.
Why do governments prefer their citizens to adopt their currencies? Because then your savings become the government’s piggy bank, from which they can extract value through devaluation (in the era of coinage) or inflation (in the current era of fiat currency).
This is why sovereign governments around the world widely oppose private issuance of currency and being detached from the banking system.
Now you can think a little: why do they allow BTC to exist?
They don’t. It’s just that they have no viable way to stop an idea when its time comes.
The most powerful force in human society is not money or power (violence), but history. The tide of history is unstoppable. And the driving force behind creating world history is not emperors or nobles, but you, me, him, and billions of ordinary and ordinary people around the world.
When everyone is awakened and everyone believes that the unreasonable needs to be changed, it will definitely change. All ignorance and reaction will eventually be swept into the garbage dump of history.
(WeChat Official Account: Liu Jiaolian. Knowledge Planet: Reply “Planet” to the WeChat Official Account)
(Disclaimer: The content of this article does not constitute any investment advice. Cryptocurrencies are highly risky and can go to zero at any time. Please participate with caution and take responsibility for yourself.)
Tags:
Liu Jiaolian
Investment Insights
Bitcoin
Essays
Gold
Source link:
https://mp.weixin.qq.com/s/fZixq7mEsyJg5N66tGFkPg
Note: The views expressed in all articles by BitPush only represent the author’s opinion and do not constitute investment advice.
Original article link: https://www.bitpush.news/articles/6683485
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