Author | Mumu
Produced by｜Baihua Blockchain
For many years, there has been a saying in the crypto space: "The biggest risk of Bitcoin is that you can't hold it." In essence, "not being able to hold it" is a problem of cognition and information gap. 16 years have passed since the birth of the Bitcoin Genesis Block, and many people still feel that Bitcoin is "illusory" and are worried. Rather than discussing "what is the biggest risk of Bitcoin", it is better to discuss whether people's biggest concerns about the existence of Bitcoin are redundant...
01. The “virtual” attributes of crypto assets
Cryptocurrency assets such as Bitcoin have always been classified as "virtual" assets by the crypto community. When people mention the word "virtual", they naturally have a sense of "elusiveness" and it doesn't sound like something "formal" or "serious". Therefore, opponents have a point of view: virtual assets have no credit endorsement, currency must be based on credit and physical exchange, and virtual assets are ultimately a dream.
The above view is so popular that it is reasonable to a certain extent, because according to common sense, the US dollar and the Japanese yen are backed by the national credit of the United States and Japan and have stable purchasing power. Crypto assets whose sources are unknown naturally do not have these guarantees, so how can they be trusted?
In fact, this view ignores the technical value behind crypto assets and does not understand what "consensus" is. For example, concepts such as blockchain technology, Web3, and decentralized finance have already demonstrated their value in actual application in the fields of global payment and clearing. More importantly, the value "consensus" behind crypto assets is essentially the same as the consensus generated by credit endorsement.
The reason why currency needs credit endorsement is that the structure of human society is complex and requires a unified and powerful centralized organization to act as a credit intermediary to provide a consensus basis. For decentralized things, like natural resources such as gold and stones in the river, the physical properties are their natural consensus. Even without the credit endorsement of the state, everyone agrees that stones are hard, gold is always shiny, rust-free and valuable. This is also the basic principle why ancient human society was able to use shell coins, stone coins, and gold as currency.
In short, what determines whether something is valuable is not whether it has credit endorsement, but whether it has consensus.
02. America’s harvesting tool?
In recent years, as a global financial center, the United States has had an increasingly powerful voice in crypto assets. Not only are crypto assets priced in US dollars, but crypto asset spot ETFs listed on the US stock market have also attracted hundreds of billions of dollars in funds. A large number of US listed companies and financial institutions hold Bitcoin, and now the incoming president is also "determined to gain" the US's crypto asset advantage.
As the United States increases its supervision and control over crypto assets such as Bitcoin and upstream and downstream market industries, people are beginning to worry and even believe that this will become a tool for the United States to reap the world, just like the US dollar.
This concern is indeed not without reason. The greater the voice, the more influence the crypto market can have, and the global retail investors will be "harvested" at any time. Referring to the previous US harvesting logic, the United States has attracted global funds to the virtual currency market through financial innovation and dollar hegemony. If the price of crypto assets plummets, it may eventually lead to capital flowing back to US dollar assets. This is indeed in line with the logic of "dollar harvesting" to some extent.
Of course, this concern also has its limitations, because crypto assets such as Bitcoin and Ethereum are not actually initiated and dominated by the United States, but are more driven by the bottom-up "reform" of private forces through technological innovation. Wall Street and other capitals in the United States have also been gradually deployed after crypto assets such as Bitcoin have matured. Therefore, this is not a "conspiracy" planned in advance by the United States, but a field born from the development of technology and market demand.
In addition, public blockchains such as Bitcoin and Ethereum are technically unlikely to be controlled. Even if some mining pools and service agencies are deployed in the United States, their distributed nodes are widely spread all over the world. Even if the relevant US authorities can restrict local nodes from reviewing transactions through supervision or regulations, overseas nodes can still submit and publish transactions. It is like gold mines all over the world. Local authorities can order local gold mines to stop working, but they cannot command or influence the operation of gold mines in other regions.
Furthermore, the reason why the United States reaps the world through the hegemony of the US dollar is because of its absolute control over the US dollar, but can the United States control Bitcoin like it controls the US dollar? No, but the United States can dominate Bitcoin like it dominates the world's mainstream assets such as gold and oil and modern technology.
On the contrary, the United States can also marginalize Bitcoin to a certain extent within a specific range, but it cannot kill it (if it could, it would have died hundreds of times). Of course, considering the binding of interests, the United States is unlikely to go the other way and sacrifice the interests of Wall Street capital, at least not before it breaks away from the interests of the United States itself.
03. Financial inequality and unlimited issuance?
Some people say that it is unfair to ordinary people nowadays compared to early participants? This is what many people call financial inequality. In fact, the Bitcoin network and community information are open and fair. As a public blockchain, it lies there like a public resource. Anyone can check the information and submit transactions to its network. It’s just that some people are unwilling to understand and accept new things and don’t want to take a step forward.
Others say that the upper limit of Bitcoin at 21 million does not exist because its smallest unit, Satoshi, is almost infinite.
This is a bit strange. The change in unit has nothing to do with the total amount. 1L of water is enough for one person to drink. It cannot be said that if it has 1000ML, it can be divided into 1000 people. The unit has changed, but the total amount will never change.
04. Summary
In general, most people's "opposition" to Bitcoin is more due to misunderstanding. The "virtual" era has become a thing of the past. From a "little player" to a mainstream asset, Bitcoin's consensus and status have become more and more solid in the past 16 years, and it has the strength to compete with gold. The strong intervention of the United States is not a bad thing at present, but there are still many uncertainties and we need to beware of large fluctuations. I still believe that encryption and AI will jointly lead the reshaping of the future of the digital age.
