Loyalty: The answer to the most confusing about Bitcoin

There are still a lot of reviews and negatives around Bitcoin, so I'll check them out and answer them here. The most common criticisms are as follows, which we have discussed a number of times, but in light of recent interest in Bitcoin, we would like to share a recent answer. Specifically:

Bitcoin prices are very volatile to preserve value.

Bitcoin cannot be used as a means of payment.

Bitcoin is a waste of capital.

Bitcoin is used for crime.

Bitcoin is not supported in any way.

Bitcoin will be replaced by competitors.

Review 1: The price of Bitcoin does not fluctuate too much to be used as a stock exchange.

teb:Bitcoin volatility is a completely inelastic supply of assets and insurmountable trading in the market.However, with the adoption of Bitcoin and the improvement of commodities and investments, Bitcoin's scarcity will continue to decline, like any other commodity in history. .

As mentioned in previous research papers, Bitcoin's growth trajectory may not be linear.Currently, Bitcoin is a new market in value and is seeking funding, including its role as a value retailer.Compared to other assets (like gold), Bitcoin holders are also narrow.

Pollution in the space and derivatives trade and improved product quality are allowing investors to increase their interest in Bitcoin in a number of ways.Bitcoin's daily exchange rate is expected to decrease over time, expanding its holdings, and increasing the engagement and trading of its participants.As the number of Bitcoin holders increases and the ability of new entrants to enter the market decreases, the value of Bitcoin is expected to remain stable as a result.

However, Bitcoin's volatility is expected to be lower than it is today, but in the next sentence weSituational volatility analysis.

One way to identify Bitcoin's volatility is to compare it to gold in the 1970s.According to Matt Hougan, research director at Bitwise Investments, when the United States abandoned the gold standard, investors were unsure of the role of gold. This causes the price of gold to fluctuate every year and every day like Bitcoin today. For example, in 1973,Gold prices have risen and fallen more than 3% during more than 10% of the trading day.Tab sis zoo li tus legendary Wall Street hedge fund managerPaul Tudor JonesA general reading for investors in May 2020 states:

As for gold, now is a good time to buy as the price of gold has more than tripled from its previous high.

Paul Tudor Jones, Founder and Chief Investment Officer of Tudor Investments

Another way to understand Bitcoin's volatility is that it is the result of unreliable assets.An increase in demand does not translate into an increase in Bitcoin offerings or an increase in the value of Bitcoin offerings (a difficult change to ensure blocks are created on average every 10 minutes).It should be noted that this inelastic supply makes Bitcoin insufficient and valuable.Therefore, Bitcoin traders accept uncertainty as price or value to get the value of the asset and believe that there is a significant market that has not yet been used and utilized for this treasure.

The volatility of Bitcoin can also be explained by the fact that Bitcoin has a market that protects against interference. No central bank or government can intervene to stimulate or support the economy and weaken it.Bitcoin volatility is an exchange for unaffected traders.The discovery of true value comes with volatility and may be more attractive than security. This is because the latter can explode without interference if it causes distorted operation.

The markets in which we operate are very asymmetric and the ups and downs are increasing. The potential of an already broadened trade policy to accommodate more and more counterattacks will ultimately depend on the risks of the collective faith of traders.

Mohamed A. El-Erian, Former CEO and Co-Chief Investment Officer, Pacific Investment Management Corporation (PIMCO)

Review 2: Bitcoin cannot be a payment method

teb:Bitcoin has been carefully evaluated for its limited and expensive investment in providing key assets such as decentralization and immutability. In the sense of high payment guarantees, Bitcoin took advantage of its low payment portfolio to handle transactions that fell short of the quality of traditional systems.

Many also believe that Bitcoin's primary use case is payment for daily microtransactions. Critics believe that Bitcoin has failed in this regard because it does not use the same payment methods as Visa, Mastercard, or PayPal. Contrary to what some people think,According to data from Chainalysis, the profitable market that passes through online payment companies has exceeded US $ 500 million per month since 2017, setting lower rates for transactions based on Bitcoin as a payment method.

As a payment method, Bitcoin can outperform modern technologies (such as international payments) in some cases, but Visa, Apple Pay, Google Payments, PayPal, and fiat currencies work and work well on most everyday payments.

John Pfeffer, partner of Pfeffer Capital, former member of KKR, Office of Business Justice

After accepting Bitcoin to complete a transaction with restrictions and checks and tracking balances, the appropriate questions to ask are: Which business ventures should be listed at the bottom of the list? Bitcoin? Additionally, which markets require the international exchange of Bitcoin? Perhaps the most important use of Bitcoin's ability to restrict the collection of information related to the daily payment of the eye, such as the example of the daily payment for a cup of coffee.Instead, it is used for companies that have benefited from the strong acceptance of Bitcoin, but the existing financial services are insufficient.

For example, the use of funds is always unprofitable or expensive.

This includes, but is not limited to, international payments made by international companies and interim payments between banks and government.An example of this type isBitpes, allowing its consumers (small and medium-sized enterprises and multinationals) to become an interactive African currency and marketed internally via Bitcoin.BitPesa was the first payment processor to use Bitcoin., is one of the companies that reduces the cost and friction of the futures market.

In certain circumstances, Bitcoin can also provide excellent currency conversion options.This is especially due to the fact that shipments to and from countries capable of controlling or combating high inflation are slow and expensive. According to World Bank data, the average global remittance value of $ 200 in the first quarter of 2020 was 6.8%.

In addition, although the capacity of the chain is limited, the second solution for payments with Bitcoin isIt can meet low cost Bitcoin market demand (such as Lightning Network, Bitcoin bank, etc.) (no balance of payment chain guarantee).

Taxes are another factor affecting the use of Bitcoin, which is difficult to implement as a means of payment in countries like the United States.For example, the US Internal Revenue Service (IRS) distributes Bitcoin as follows:"domicile". On the payments side, this means that Bitcoin users have to count their personal income or loss every time they pay or buy with Bitcoin, which reduces the preference and fluidity of Bitcoin depending on the payment tools.

Review 3: Bitcoin is a waste of capital

teb:A significant portion of the electricity used to mine Bitcoin comes from renewable energy sources or electronic devices which are wasted when not in use. In addition, the power used by the Bitcoin network is a viable and important resource.

There are several versions of estimates for the percentage of Bitcoin mined from renewable energy.For example, the Cambridge Center for Alternative Finance (CCAF) Third World Crypto Assets report estimates that 76% of miners use renewable energy as part of their energy portfolio, especially hydropower. According to CCAF estimates, renewable energy accounts for 39% of the total energy consumption of Bitcoin mining. CoinShares estimates that as of December 2019, the penetration of renewable assets in the Bitcoin mining energy mix was 73%. Both organizations believe that much of the work will be done by renewable energy sources such as hydropower, wind power and solar power.

Some recent data suggests that the share of mining related to renewable energy will increase.For example, En Group has formed a joint venture to develop low-carbon renewable energy technologies in Bitcoin mining. The CCAF also estimates that even if coal is used as the sole source of electricity, the total carbon dioxide emissions from bitcoin mining will not exceed 58 million tonnes, which is only 0.17% of global carbon dioxide emissions.

Recently, many companies that use fossil fuels for their operations Bitcoin mining has been designed to reduce carbon and methane emissions in the process, while using energy that would otherwise not be available to others. purposes.Companies that use gas byproducts unused by Bitcoin may also produce more oil than they sell at market value.15 times or more of income. They can also set up a Bitcoin mining business to comply with regulations that restrict the use of carbon monoxide that can be burned or emitted, and shut down operations to avoid penalties or damage to the mining industry. .

Idle natural gas is very little used natural gas and appears to be waste.An oil well or well without pipelines necessary to transport gas is considered inoperative. If there is no pipeline for transportation or the cost is too low to pay for freight, do not use carbon monoxide and be ignited (manually ignited to avoid dangerous explosion) or complete (released in the air). The first two major oil fields in the United States burned or released approximately 500 billion cubic feet of greenhouse gases in 2019, and the impact to the atmosphere is equivalent to seven times the direct emissions of carbon monoxide from the systems. electric. In December 2019, Crusoe Energy Systems announced plans to set up 70 Bitcoin miners this year to prevent 10 million cubic feet of natural gas from igniting daily. The multinational oil company Equinor has also announced plans to use fossil fuels for bitcoin mining.

Here's my favorite way to do it: Think of a world map. But consider using local utility bills as a distinction to determine elevation and valley. Adding Bitcoin to that is like pouring a glass of water on a 3D card. Dark valley to smooth the contrast with the ground.

Former Cryptocurrency Analyst Fidelity First, Founder of Coin Metrics, Castle Island Ventures Partner Nic Carter

However, it is undeniable that the energy of Bitcoin mining. So the question is, is it necessary to use energy to secure the Bitcoin network and perform transactions? Of course, the answer will be different for each person. Some people know.As the first and only rare, intrusive, censorship and lockdown resistant digital device, Bitcoin is believed to be worth the investment because it can be traded yes.The most important characteristics of Bitcoin - unreliability, volatility (volatility) and security (resistance) - are directly related to the capital used for trading. No operating and maintenance costs,Bitcoin cannot function as a secure global exchange and store.

In the long term, the most important goal of the movement will be to ensure the integrity of the profit network and to develop these Bitcoin networks.

Parker Lewis, Director of Business Development, Unchained Capital

Review 4: Bitcoin is used for fraud.

teb:Bitcoin is a medium like cash or online, and its products are good for good people and good for bad people.However, in terms of total market share, the relationship between the Bitcoin market and crime is minimal.

Criticizing bitcoin for criminal purposes is similar to criticizing money for hacking or being on a dark website and trading on the internet.Bitcoin (cash or internet, etc.) is average. While Bitcoin provides new features and positively impacts people, Bitcoin's classification and censorship resistant features can also be exploited by malicious criminals.

It is important not to think about using Bitcoin for a vacuum breach. According to data from blockchain analytics firm Elliptic,The use of Bitcoin for criminal purposes (such as black market, ransomware, fraud) is on the decline, with business-related crime accounting for less than 1% of all transactions.

Bitcoin transparency allows us to accurately estimate the percentage of Bitcoin used for fraud, where we cannot estimate the role of cash and finance in illegal transactions, so people are more likely to spill that dirt easily. Water Bitcoin while ignoring the role of cash and the financial system in crime.For example, statistics from the United Nations Office on Drug Crime and serial analysis show that for every $ 1 spent on Bitcoin on a dark website, at least $ 800 is laundered in cash.

Virtual funds are used for illegal transactions, but this amount is insignificant compared to illicit funds from traditional financial services.

Jennifer Fowler, Former Vice President of Financial Services and Financial Crisis

Review 5: Bitcoin is not supported in any way

Answer: Bitcoin is not taken out by cash flow, utilities, or politics.This is supported by existing agreements between the law and its stakeholders.

Always available"What is an Inheritance class? "(What is an asset class?) Publications (published in “The Journal of Portfolio Management”, 1997);Robert Greer(Robert Greer) Our dictionary"Super asset class"—— Capital assets, Consumable / convertible assets (C / T) and Store of value assets (SOV).

Greer places gold in the ranks of retailers at a price where the assets "cannot be used and generate income."But they are useful. "However, because gold is used in the jewelry and technology industries (electronics, dental, etc.), it also has its advantages. Characteristics of the C / T super tool. However, jewelry is considered to be an alternative ... Treasure ..."Personal reserve", only a small fraction is used in industrial applications (only 7% in the electrical and dental industry in 2019).

Robert Greer also classified Fiat as a treasure. The controversy over the status of fiat currency is that its benefits relate to trust in government alone.Often, however, there will be major gaps between government capital and confidence in central banks to control fiat money (see Venezuela and Lebanon for example not recently). The financial and monetary policy of many central and government banks has come close to commercialization and its use as a means of financing, resulting in huge losses for the purchase of fiat money.

According to Greer's point, Bitcoin is the best choice for the superclass in the market at a price. Bitcoin is not withdrawn from cash flow and is not backed by commercial or legal means.Its behavior is supported by code, which is achieved through contracts with key stakeholders.The members of this group live in equal states and neither group has much power.

Users select the exchange on the network and pay for the completion of the exchange.

The miners choose to pay the cost of the exchanges and deliver the end result.

The nodes choose to run the Bitcoin software to monitor the exchange.

The developers choose to keep the Bitcoin software.

Bitcoin participants explicitly choose to use and support the Bitcoin blockchain network;Recognize the unique properties of Bitcoin-Bitcoin's shortcomings, volatility and resistance to foreclosures and censorship.That is, each time a new participant is addedBitcoin network effect is more stable,Maintain assets by strengthening the product and attracting potential customers.

The Bitcoin code provides rights, but participants manage the rules and come to an agreement on the rules, creating an international, open and secure storage and exchange rate. .

Review 6: Bitcoin can be traded by a competitor.

teb:Open source Bitcoin software can be forked, but community and network are affected. Bitcoin trades in key features that the market sees as profitable.

A number of digital assets have emerged that claim to solve Bitcoin shortages.However, there is still nothing that can provide network benefits like Bitcoin.Bitcoin has important features and, as mentioned several times in this article, focuses on trading to provide those features. Even if competitors try to improve Bitcoin restrictions (e.g. trade limits or higher volatility),However, the value comes from the cost of the key attributes that make Bitcoin profitable.(eg, skepticism, decentralization, immutability).

This explains the reason for the cost of the market, the number of investors and customers, the number of miners and validators, retailers and manufacturers and their merchandise considerations.Bitcoin continues to be the king of cryptocurrencies.As shown below,Bitcoin's market value is greater than the total market value of its competitors (other PoW digital assets).

Bitcoin's software is open source and can be forked, but network and community issues (participants, miners, validators, developers, service providers) are not.The trade-off that participants understand and accept Bitcoin is not straightforward enough.

Therefore

While this article does not explicitly address the Bitcoin criticism, I believe the answers listed here have led to other negative assumptions.

Bitcoin is a unique digital asset, and the increasingly digitized world needs to dig deeper into space to understand its fundamental value and market value. Bitcoin encourages agents to seek their advice ahead of time, ask for facts and agree to terms, and begin to understand Bitcoin in its entirety.