Tesla’s purchase of a large number of bitcoin triggered a heated debate: is bitcoin worth investing in?

Not long ago, an explosive news story about bitcoin sparked a heated debate: Tesla joined the money speculation army and bought $1.5 billion worth of bitcoin. As soon as the news came out, the price of bitcoin soared by 20% on the same day, and its market value increased by 80 billion US dollars. This is actually a microcosm of bitcoin mania. Many people don’t believe in bitcoin at all. They think it’s a scam with no value. It’s just a bubble raised by retail investors. In the past year, bitcoin has soared more than once, but it has fallen to the ground every time. Is it different this time? The pros and cons hold their own views, and both are justified. As a result, retail investors who fail to get on the bus watch bitcoin soar every day, but dare not get on the bus. Those who get on the bus are afraid that one day they will fall, and they will be busy in vain. Today, I’d like to give you an objective analysis. What kind of investment is bitcoin? How will it develop in the future? What are the advantages and risks? In short, bitcoin is an unofficial digital currency with blockchain technology. Blockchain technology and digital currency have a lot of professional properties. I’m not here for science popularization. I’d like to introduce the properties of bitcoin that can help us make investment decisions. The first is that bitcoin can not be tampered with or forged. Bitcoin can prevent counterfeiting. More importantly, it means that bitcoin is different from the sovereign currency issued by the state. It is not that you can release water if the central bank says that you can print money by printing money. No one can control the issuance and circulation of bitcoin. Nature 2. The number of bitcoin is limited. The maximum number of bitcoin is 21 million. There will not be more bitcoin. On the contrary, it will probably decline. There is an interesting phenomenon. Some people buy bitcoin for a long time and forget the password. As a result, this part of bitcoin disappears permanently. According to statistics, about 20% of bitcoin in the world has disappeared because users forget their passwords, and it is estimated that 2% to 4% of the total bitcoin will disappear every year in the future. This gives bitcoin a natural deflationary nature, equivalent to paying its holders two to four percent of interest each year. Third, bitcoin has strong liquidity and is easy to transfer and trade. Due to the above two properties, bitcoin has a strong hedging characteristics. Compared with traditional safe haven assets, such as gold, art and real estate, bitcoin is more convenient for circulation, and better for trading and transferring money, which is highly valued by investors. In fact, these properties of bitcoin have always been there, and it has not made any technical breakthrough recently. Why has bitcoin suddenly become popular in recent months? After my research, I found that the most fundamental reason is anti inflation. The biggest risk facing 2021 is inflation. As a result of the epidemic, central banks of major economies in the world have collectively released water. Long term real interest rates are less than zero, and bond yields are also historically low. Moreover, in order to deal with the epidemic situation, governments of all countries are basically in debt. The biggest concern of investors is that the sovereign currency has the risk of devaluation. Therefore, people have begun to look for investment alternatives to resist the risk of inflation. In the past, people would focus on gold, but in fact, as an investment product, gold has many disadvantages, such as poor liquidity and storage difficulties. However, the mining speed of bitcoin is far lower than that of gold. Due to its high liquidity and unforgeable nature, bitcoin is even better than gold in terms of risk aversion function. So bitcoin also has a name called e-gold. We see that Tesla bought $1.5 billion of bitcoin to fight the risk of inflation. First of all, I think that in the long run, bitcoin will be far more valuable than it is now. Bitcoin is indeed safer and more convenient to circulate than sovereign currency, and has better hedging function than gold. These factors will certainly attract more investors to hold bitcoin in the future. At present, institutions are not involved in bitcoin investment. However, institutional investors need hedging function most. Bitcoin is a very suitable investment target. I think that the future financial institutions and even the state’s foreign exchange reserves may gradually introduce bitcoin. For us ordinary people, bitcoin also has a great opportunity to gradually enter our lives. More countries and companies around the world have accepted bitcoin. For example, Starbucks, Tesla and other enterprises support bitcoin as the payment method, which provides more possibilities for the application of bitcoin in the future. I’m not sure whether it will become a super sovereign currency, but I think the long-term demand for bitcoin will increase significantly in the future, but I think the process will be very slow. I believe that there must be some observers who want to ask, is bitcoin investment or not? It is understood that many people hold a polarized attitude towards bitcoin, believing that what is good can bring him to heaven, and those who think that he is not good can make him say nothing. Bitcoin is facing a series of problems, but this is not the reason to block the development of bitcoin. On the contrary, the development of any technology is a process of solving problems with higher technology. Bitcoin and blockchain have proved to be good technologies, but they still need time and more commercial incentives to develop. So in my opinion, bitcoin investment requires a certain belief. If you’re just making money on short-term speculation, it’s better not to put too many positions in bitcoin. Now retail investors’ enthusiasm for bitcoin may still be burning for a while, but no one knows when the upsurge will be over. Although I look at the value of bitcoin in the long run, I also think that bitcoin is likely to have a big correction in the short term. But to be honest, not touching bitcoin at all also requires faith, and you need a strong mindset to cope with a rise that you don’t know when or how much. So my suggestion is that if you have spare money, you can buy a small amount of bitcoin and prepare for a short-term callback, so that you won’t be too distressed to lose money. As mentioned above, bitcoin investment is a matter of different opinions. I would also like to hear your views on bitcoin. See you in our comments~

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