Bitcoin (BTC) is a digital currency with a total amount of 21 million. It has the same characteristics of decentralization, globalization and anonymity as the Internet. Transferring Bitcoin to the other end of the globe is as simple as sending an email, low cost, without any restrictions. Bitcoin is therefore used in areas such as cross-border trade, payments, and remittances.
Bitcoin has continued to rise since its birth in 2009 due to its vast prospects and huge imaginary space. In 2011, the price reached US$1, and in 2013 it reached US$1,200, more than 1 ounce of gold. It has the reputation of “Digital Gold”.
Q1: Is Bitcoin legal?
At present, although some governments recognize that Bitcoin has currency attributes, most governments do not recognize Bitcoin as a currency, but define Bitcoin as a commodity. The main views of governments on Bitcoin are:
1 The US Commodity Futures Trading Commission (CFTC) defines Bitcoin as a commodity, the same as gold crude wheat. (Phoenix Finance "Bitcoin is officially classified as a commodity subject to CFTC supervision")
2 The “Notice on Preventing Bitcoin Risks” jointly issued by the five ministries and commissions, such as the People’s Bank of China, prohibits financial institutions from intervening in Bitcoin, but also believes that:
“Bitcoin is a specific virtual commodity that does not have the legal status equivalent to currency and cannot and should not be used as currency in the market. However, Bitcoin transactions act as a commodity on the Internet, and ordinary people are Freedom of participation at the risk of self-risk."
Therefore, Bitcoin is not an illegal product prohibited by the government, but a legally recognized commodity and investment product, or even a currency.
Q2: Is Bitcoin a "Ponzi scheme" or a pyramid scheme?
The flow of funds in the Bitcoin trading market is similar to that of the stock market. New investors buy investment (bitcoin or stock) from unspecified old investors, and no new or old investors can guarantee profit.
The definition of "Ponzi scheme" is: the use of the money of the later "investors" to return to the former "investors" as a reward for the act of attracting funds,
“MLM” is defined as the act of attracting and allocating funds through specific upper and lower line relationships.
In the bitcoin/stock market, the elderly have no advantage over the newcomers, and they have to rely on their own ability to judge the rise and fall and profit; while the Ponzi scheme/MLM middle-aged man has a compulsory advantage over the newcomer, and the old man is forced to obtain funds from the newcomer.
So although the bitcoin/stock market is the same as the Ponzi scheme/MLM, which relies on latecomer funding, the bitcoin market and the stock market are in the same category, not Ponzi schemes or pyramid schemes.
To put it bluntly, the pyramid scheme is said to guarantee you to make money. How much is the monthly income? If you pay the money, he can take some of the benefits from the money you paid (such as 30%~50%); The player of the coin and you are talking about the risk of bitcoin investment. In history, there were three bubbles after the crash, and it fell 80%~95%. If you buy it, you have to prepare for zeroing. You have no benefit in buying it. Strictly speaking, if he holds one ten-thousandth of the total amount of bitcoin, he has one in ten thousand benefits.)
Q3: What is the use of Bitcoin?
1 BTC prices start from zero, to the highest equivalent of one ounce of gold. Although there are speculation and bubbles, the price fluctuates around value for a long time. The fundamental source of bitcoin price is the value of bitcoin, and the value comes from use. The main uses of Bitcoin are:
(1) Payment of remittance
As we all know, the flow of funds across the space is costly, and the cost of capital flow is reflected in the method of card processing fees, cross-banking fees, off-site/transnational remittance fees, and currency conversion fees. The essence of cost is the cost of the government, the bank's bloated personnel, venues, equipment and so on. More importantly, the government often restricts the flow of funds across borders in the form of foreign exchange controls, while bitcoin is not affected by foreign exchange controls.
The extremely low cost of bitcoin payment has attracted tens of thousands of merchants around the world to accept bitcoin payments, including giants such as Microsoft, Dell, and New Egg (Diamond Finance "Dell officially accepts bitcoin payment"). The cost of merchant fee for cross-border credit card payment is 3%-4%, while the cost of using Bitcoin payment is only 0.5%~1% (including the cost of conversion to French currency), so merchants often give certain discounts to Attracting buyers to pay in bitcoin, for example, Dell gives 10% (up to $150).
(2) Information disclosure
Every transaction of Bitcoin is broadcasted on the whole network. All transactions are visible to everyone, which means that everyone can view all historical transactions of a certain bitcoin address, and these transactions are absolutely unforgeable. In some cases it becomes a particularly useful feature.
(Note) You can view the balance and historical transactions of any Bitcoin address through the Block Trading Browser such as http://blockchain.info. Specific examples are as follows:
1 charity fundraising
Charities use bitcoin addresses to raise funds. There is no need for charities to open their accounts on their own initiative. Everyone can view all historical accounts at this address.
For example, in the Ya'an earthquake, the Bitcoin donation address of the One Foundation is:
https://blockchain.info/zh-cn/address/1DUMifqLdCRvx6tAzafwDC2tKRntRAAm3z, anyone can view a total of 103 donations of 235.82622988 bitcoin.
Bitcoin's encryption system is so unbreakable that it can be used for personal or organizational, IoT device authentication or registration. For example, the news "educational fraud is no longer possible! In the blockchain technology that helps schools verify academic authenticity, Holberton School uses Bitcoin blockchain technology to award academic credentials to students.
Want to know if a property is mortgaged? Want to know the credit history of a company? Check it out on the blockchain. This has greatly reduced the information asymmetry and transaction insecurity in the market. From a technical point of view, the world economy can truly enter the information and Internet era.
(3) for hype
Capital will naturally pursue the interests, especially in China, because of the lack of investment channels, it also generates a lot of hot money. Hot money constantly chases all kinds of speculative targets, such as stocks, foreign exchange, precious metals, and even stamp coins, garlic, Pu'er tea, yellow pear wood and so on. Investors buy ownership of a piece of art in the art exchange, apparently not for collection or appreciation. All he needs is something that can be fired.
Because of the huge space of paranoia, Bitcoin is extremely controversial, so it shows that there are fluctuations far beyond other investment products, which is naturally suitable for hot money speculation. In the stock market to achieve several times or even tens of times the profit, you need to take the risk of breaking the position with leverage; but in the bitcoin market without the need for leverage, without risking a burst, by the fluctuation of the bitcoin itself, it is possible Reach several times or even tens of times profit.
Bitcoin, as a standardization, globalization, high volatility, 24-hour never-ending trading speculation, is better than the stock market, foreign exchange, precious metals and other electronic disk speculation in volatility; in standardized trading, skyrocketing history, future prospects It is also better than the stamps of coins, garlic, Pu'er tea, and yellow pear wood, so it attracts a lot of hot money to participate in the speculation. At present, bitcoin attracts funds as a speculative target, far more than the funds attracted by the payment system. At least half of each dollar price is the value of speculation.
(4) Concealed assets
Regardless of how many bitcoins are stored, just write down the private key of the bitcoin address (which can be simply understood as a password, such as a string of characters such as 5KYZdUEo39z3FPrtuX2QbbwGnNP5zTd7yyr2SC1j299sBCnWjss). The private key can be recorded on paper, U disk, network disk, mailbox. Even use a sentence as a private key. If corrupt officials use Bitcoin to store their money and use Bitcoin futures to hedge their value (to avoid bitcoin price fluctuations), the news that "Wei Pengyuan’s home found more than 200 million yuan in cash to burn out four money detectors on the spot" may no longer be the case. appear.
(5) Value storage
As with the limited amount of gold, the total amount of Bitcoin is constant at 21 million. As mentioned above, Bitcoin has certain uses and value in areas such as payment remittance, smart contracts, information disclosure, speculation, and illegal use. Although Bitcoin has a lot of controversy due to huge reverie space, it shows far more fluctuations and bubbles than gold in the short-term, but in the long run, Bitcoin has the same value-added and value-added performance as gold.
(6) Risk avoidance function
As the saying goes, "Shengshi antiques, chaotic gold", gold is a traditional safe-haven asset, but the cost of gold possession and storage is too high, especially in the troubled times to save gold is a high-risk task, even the government will not hesitate to pull down the face Come and grab your gold.
Bitcoin is much safer in times of trouble. No one knows how many bitcoins you store secretly. Bitcoin private keys can be recorded on paper, U disk, network disk, mailbox, or even a sentence as a private key. For the first time in human history, Bitcoin has used technical means to ensure that private property is sacred and inviolable.
The meaning of property security is too much to say. In addition to life and body, I am afraid that property is the most in need of protection. Property represents security, freedom, dignity, happiness, and even power. If property is not safe, people are certainly not happy, not free, and always in great fear. Without property security, people will have more or less fear of future uncertainty. This fear will turn into an endless desire to make money, and then sacrifice freedom, dignity and even health in order to make money.
(7) Refuge function
Bitcoin has an absolute advantage in the value storage of this:
1 It only needs to be purchased in the domestic currency in the country.
2 The storage account is completely anonymous after purchase and is unknown.
3 You only need to encrypt the private key and send it to multiple mailboxes or network disks to easily store Bitcoin. It is even possible to store bitcoin (brain wallet scheme) with a single sentence as a private key.
4 In any place with a network, you can use the stored private currency or brain wallet password, use the stored bitcoin, and exchange funds through exchange or over-the-counter transactions.
Under these huge advantages, the price fluctuation disadvantage of Bitcoin is negligible. A billionaires store 100 million yuan in Bitcoin. Even if there are only 10 million yuan left because of the plunge in bitcoin, it is a sufficient refuge fund, and maybe it will be used when it needs to be used. The skyrocketing to one billion. In contrast, corrupt officials who have hidden hundreds of millions of dollars in their homes are so stupid and ridiculous in front of Bitcoin.