Xiao Lei: Bitcoin's risk aversion is limited, but humans underestimate the trend it represents

Text: Xiao Lei

Source: Xiao Lei City Club

The price of bitcoin started to rise from mid-December last year, and by mid-February this year, it has increased by more than 60%. During this period, the epidemic in the Chinese market has intensified and a new round of adjustments have been made in the global stock market. Many investors have begun to believe that Bitcoin faces the risk of uncertainty in the capital market and has a hedging effect, which can be defined as a safe-haven asset. .

However, bitcoin has fallen again recently, with a drop of nearly 30% in one month, and gold, a traditional safe-haven asset, has obviously strengthened during the same period, with an increase of nearly 10%. So if it is also defined as a safe-haven asset, why did Bitcoin and gold take a completely different trend in the background of the global stock market plunging again and the collapse of the crude oil market?

When it comes to safe-haven assets, first we have to figure out what is risk.

In human history, the concept of risk is complex and extensive. Endurance and hunger are a kind of risk, wars are a risk, disease threats are a kind of risk, earthquakes and floods are a kind of risk, and geopolitics are also a kind of This kind of risk, and the plunge in asset prices is even more of a risk.

When hunger is coming, food is a safe-haven asset; when a virus attacks, mask alcohol is a safe-haven asset; when soldiers are in trouble, weapons are a safe-haven asset; when asset prices plummet, it is safe-haven to rise against the trend Risk assets.

But except for gold, all safe-haven assets are relatively speaking. Gold can be considered a universal safe-haven asset because gold is a super-sovereign currency. As long as you hold gold, no matter what risks you encounter, You can trade what you want across regions, regimes, religions, etc. This is not the same as the logic of banknotes. For example, if you now take national currencies such as Russia and India to China, many people also do n’t recognize them. Don't talk about national currencies like Zimbabwe, Venezuela.

Of course, you can also consider food and medical supplies as a safe-haven asset, but the problem is that their hedging role is one-way. If you need the most important moment, you do n’t need food and medical supplies, but It's a ticket to other places. Can you get a ticket when you get food and medical supplies at this time? Of course not, but you can give a gold bar to someone who has jurisdiction over the aircraft, and you may be able to escape the danger.

Therefore, gold can be defined as an ultimate safe-haven asset, because its value does not need to be guaranteed by countries, organizations, etc., and there is a global consensus mechanism. All people recognize the monetary attributes of gold, and the degree of gold standardization is extremely high. Can quickly calculate the value, the lowest cost and highest efficiency to reach a transaction, you don't even need to have a common language communication with the other party, just take out the golden gold and let the other party weigh the weight.

Later, with the rise of the United States, the dollar seemed to become a global safe-haven currency after gold. Whether it is the black market arms sales in Africa or the Middle East, the drug dealers in Mexico, or the casinos in Southeast Asia, as long as you take out the US dollar bill with the head of the previous US president, the transaction will be completed very quickly, because the counterparty will no longer follow You discuss what the dollar is, what it can be used for, what value it has, and so on. This is the currency consensus mechanism.

And the dollar has come to this step, the supporting factors behind it are unique. The first is the world's first economic output capability of the United States, the second is the military capabilities beyond the sum of other countries in the world, and the third is the US dollar settlement and pricing system that penetrates almost every corner of the world.

Therefore, the US dollar has basically replaced gold in the actual use of global currencies. If you put it another way, the US dollar is equivalent to providing a more convenient global currency service than gold.

But the problem is that to date, the demand for international universal currency from human development requires not only the convenience of the US dollar, but also the super-sovereign attribute like gold. From the history of the past half century, when people's demand for convenience is higher, the dollar will naturally overwhelm gold and become the mainstream, but when people's demand for security is higher than the demand for convenience, gold will be squeezed again. US dollars.

But is this cycle the ultimate ownership of the human economy? The answer is no. Because as long as the future currency market, who can have both the convenience of the US dollar and the super-sovereign consensus of gold, who can overwhelm both gold and the US dollar at the same time.

This is why I say that the emergence of digital currencies, including Bitcoin, is actually the result of market demand. Because after the 2008 financial crisis in the United States, many elites around the world began to seek a way that can be like gold and not subject to sovereignty. Credit-affected currencies must also be able to reach international currencies that are as convenient as US dollar transactions.

At present, digital currencies similar to Bitcoin have already met some needs, such as super-sovereign attributes. As for convenience, there are two aspects, one is digitization, transnational transactions and acceptance, and the other is the throughput that can be carried. In fact, in addition to the difficulty in meeting the requirements in terms of throughput, other aspects of development have high-dimensional potential.

Of course, some people say that the bitcoin price fluctuates violently and cannot be used as a currency. I think this idea is a typical analyst thinking, not a historical thinking.

In order to improve production efficiency, mankind has entered the mobile phone era from the landline era. An Apple mobile phone costs 10,000 yuan, and a landline of 500 yuan can buy a good brand. Then why do more and more people go? Buy a mobile phone for 10,000 yuan instead of a landline of 500 yuan? The reason is very simple. The tool of landline has become increasingly difficult to meet people's needs for communication tools.

Bitcoin is the same. It is just a currency tool more in line with future needs. If you think that Bitcoin is very different from mobile phones and that commodities are very different from currencies, it is because you have not figured out human activities. At the lowest level of logic, gold is not only currency, but also a temperature-resistant material on gold teeth, jewelry, and space shuttles.

Whether the price of a currency is stable is not determined by anyone, but through a long-term market game. Bitcoin is only in such a game period. From a historical perspective, whoever tries to stop the currency's trend of improving and evolving may end up losing ground and losing its competitive advantage.

Throughout all historically powerful nations, including ancient China, which has been strong for thousands of years, and the super empire in the Western industrial era, in fact, gold and silver have been used as super-sovereign currencies. It is not necessary to have a sovereign currency.

Who can create more wealth will be marked by more digital currencies around the world. This is similar to the "official silver" in ancient China. Silver was not created by the country, but the country can create more economic prosperity through economic prosperity. More taxation, label the money received. "Official Banking" can be used to issue officials' salaries, can be used for war forces, disaster relief, etc., without changing the background of the currency, a set of circulation, distribution, rewards and punishments, incentives and tracking, monitoring system .

In this way, a more efficient national management system can be established and long-term economic competitiveness can be enhanced. It is just that the system based on physical currency has a huge cost to maintain its virtuous circle. In the end, this cost will consume the newly created wealth created by the society, which will lead to inadequate income. In the end, the entire system will definitely collapse.

The emergence of super-sovereign digital currency will greatly reduce the cost of the currency operating system, and the larger the scale, the lower the cost and the more effective management. This is similar to the emergence of unofficial Weibo and WeChat. It reduces the cost of information exchange. The more people use it, the lower the cost. As low as the general public, there is no extra cost. Internet fees, then you can change the amount of information exchange using WeChat to write letters or telegrams to try).

The competition in the future digital currency market is not simply the creation of digital currency's sovereignty, but the right to "tag" digital currency, because there is only more wealth creation, more tax revenue creation, and more efficient social distribution System in order to more "tag" digital currencies.

Of course, what we are facing at this stage should be a digital currency of a sovereign nature, because the state as the main body can provide more convenient services based on digital currency. This is not possible with Bitcoin and so on. Bitcoin's current throughput Volume and operating costs, storage management difficulties, and various ecosystems are not considered to be able to provide more convenient transactions. This requires more powerful technical improvements, and this technical improvement is difficult to exceed the limitations of the times.

This is like Musk's goal is to emigrate to Mars, but first he has to face how to create a manned spacecraft that can go to Mars, and then how to get to Mars faster (now three Months).