Digital currency and "currency"
Digital currency has many of the original attributes of "currency"-scarcity, easy to carry, easy to divide, not easy to damage, and hard to forge.
But from the current point of view, it is difficult to say that digital currency is actually "currency" in the true sense.
Open the Blockchain-Bitcoin Wallet business map in Beijing, only Garage Coffee and 2ndPlace support Bitcoin payment, and one of them has been marked as closed on Dianping.
In daily life, it is difficult for digital currency to conduct direct transactions like "fiat currency". However, in some unseen areas (black market, blackmail, etc.), digital currency is popular, which also casts a shadow on the prospects of digital currency. Layer shadows.
What's more, modern currency has long entered the era of endogenous currency. The constant nature of the total amount of digital currency, on the contrary, restricts its credit creation system. If this is not resolved, I am afraid that digital currency will hardly be considered a "modern currency".
Digital collectibles
In my opinion, digital currency is more like a kind of "digital collectibles". On the supply side, the total amount of a certain kind of digital currency is limited. The relationship between supply and demand determines the price, so the final price depends on the willingness to "collect" this The number of people in a digital currency.
There are many reasons why people are willing to "collect" this currency. It may be because of the belief in the concept of digital currency, it may be for investment or speculation, or it may be for fighting inflation.
But for whatever reason, due to the scarcity of a certain kind of digital currency on the supply side, the more people who want to "collect" this kind of digital currency, the price will inevitably rise.
For "collectors", the identification cost of digital currency is much lower than that of traditional artworks and antiques. Moreover, the digital currency is easier to carry, not easy to damage, and there is no maintenance and maintenance costs. More importantly, digital currencies have better liquidity and lower transaction costs.
Matthew effect
Anything that has it will be added to him, so that he will have more than that; if it is not, even what he has will be taken away.
For a certain kind of digital currency, the total amount is limited. But if you look at the entire digital currency market, new varieties of digital currency may be produced every day. Currently, the number of digital currencies included by CoinMarketCap has reached 811.
This will inevitably lead to the Matthew effect-it is impossible for people to understand so many digital currencies one by one, and only pay attention to the top ones.
And the attention brought by the rise of a certain digital currency will also bring more market participants, and the more participants, the stronger the market’s liquidity, which also brings added value to this digital currency The cyclical superposition of these factors has continuously strengthened the Matthew effect in the digital currency market.
External hard constraints
The rise of digital currency itself will bring more attention, attention will bring more market participants, and the more participants, the price will be further pushed up. In this reciprocal cycle, can the price of digital currency rise indefinitely?
The answer is obviously no.
As Xu Zhe wrote in the article "External hard constraints are the only thing that can calm people down":
The frenzied people in the bubble will not suddenly wake up. The burst of the bubble comes from the external binding force, not the introspection of the participants.
As for what the external hard constraints are, this article by Mr. Xu Zhe takes the stock market as an example to give a full explanation, and I will not expand it here. I suggest that participants of digital currency all need to think about the external mandatory binding force for digital currency.
Zero sum game
One thing to note is that all digital currency transactions are zero-sum games.
Every penny you earn from digital currencies is paid for by another market participant.
In addition, people continue to "pump" in the market, including trading platform fees, quantitative trading robots, and so on.
Therefore, for "retail investors" in this market, my advice is to invest long-term and avoid frequent transactions.
The future of digital currency
The zero-sum nature of transactions does not mean that digital currencies have no value, and short-term hard constraints are not insurmountable in the long-term.
In addition to the aforementioned collection value, the current global digital currency trading market also provides relatively good liquidity support, and its derivative value includes but is not limited to convenient cross-border transactions and payments. Imagine if a country is facing severe inflation and currency regulation is tightened at the same time, how can people avoid shrinking their wealth?
In the long run, I am personally more optimistic about the future of digital currencies. I think there will be more and more usage scenarios of digital currency in the future, the liquidity provided by the digital currency market will be further enhanced, and there will be more and more "collectors" of digital currency. The price of digital currency at the top of the market It will get higher and higher.
