Bitcoin plummeted, where did the money go?

If archeologists study Bitcoin in the future, it will definitely give a name to the change in the cryptocurrency market from March 12 to 13, 2020, or "313 halving." That day, the market value of encrypted digital currencies instantly evaporated by more than half.

The money in the currency circle (actually the market value) just disappeared inexplicably in half. Where did it go?

There is a lot of discussion online about this question. As long as you exchange your currency for stocks, you can find a lot of answers. This also illustrates the importance of it, we need to think about it repeatedly, it will directly affect whether we make money or lose money.

You have a bitcoin on March 11, when the price of bitcoin was $ 8,000. In financial calculations, you have $ 8,000. By March 13, the price of Bitcoin had fallen to $ 4,000. In financial calculations, you have only $ 4,000. In these three days, you did nothing, and you lost $ 4,000 on your account. Although you still have 1BTC.

Where did this $ 4,000 go? Who was earned?

640

(Half of Bitcoin 313)

Currency has four functions: exchange medium; accounting unit; value storage; deferred payment.

During this change from 8,000 to 4,000 USD, the USD played two different functions for Bitcoin.

The first is to use the "accounting unit" feature of the US dollar to quantify the value of Bitcoin. To form a book price. In this process, there is no need for real dollars to appear, only an imagination.

The second is to use the "exchange medium" function of the US dollar to complete the exchange of Bitcoin between different people. This is the process of market transactions, one-handed payment and one-handed delivery. In this process, real dollars need to appear, and real money and coins must participate in the delivery.

We can simply say that the former is "how much bitcoin is worth"; the latter is "how much money was used in the course of bitcoin transactions" (hereinafter abbreviated as "how much money was used"). Both of these are a number, which are completely different numbers.

How much bitcoin is worth, this number can evaporate or be blown out of bubble. The process of evaporation and blowing bubbles will not generate real money flowing from one person's pocket to another, but the value of the book value of all the holders will decrease or increase and change at the same time.

How much bitcoin used, this number will not evaporate, and there will be no bubbles. This number is just a transfer from one person's pocket to another. The real dollar will not disappear or be born. This process is the process of harvesting and being harvested.

So answer the question in the title of this article: Bitcoin plummeted, where did the money (USD) go?

The answer is: Bitcoin has plummeted and money (USD) has not evaporated. What really evaporates is the "how much bitcoin is worth" figure.

During the decline of Bitcoin, a large number of people participated in the transaction. No matter how much money was used in the transaction, it would not disappear, but it was only changed from one person's pocket to another.

If you want to "how much" your currency is for real money (USD), you need to participate in the transaction. Participation in the transaction will collapse "how much is it worth" into a real loss or profit.

If you want to make money from Bitcoin, the key is to combine Bitcoin “how much is it worth” and “how much you use”. Need to buy in US dollars before the former appreciates and sell before evaporation. This is buying low and selling high. In this way, you can increase the dollar in your pocket, and the increase is due to the decrease in the counterparties participating in the transaction.

The key to making money is: buy before appreciation and sell before evaporation. The key is time. People who make money make the right time and participate in the process of trading. People who lose money make the wrong judgment and participate in the process of trading.

Those who judge right or wrong, but have not participated in the transaction, have evaporated or swelled the numbers on their books, without real losses and making money.

The Tunbian Party believes that if the time dimension is lengthened, the number of bitcoin is going to rise, so it is held for a long time.

The speculation party believes that it is necessary to predict the change in the value of bitcoin in a short time and participate in the transaction.