In May 2010, a programmer used 10,000 bitcoins to buy two pizzas, and the transaction was successful four days later. Yes, you heard it right, 10,000, pcs, tens, hundreds, thousands, 10,000 ……
Later, to commemorate the success of bitcoin payment for physical purchases, May 22nd was designated as “Bitcoin Pizza Day”.
Eleven years later, I wonder how many people will remember this day, and I wonder if anyone will still use bitcoin to buy pizza.
It’s too “fragrant”
China’s regulators have long since concluded that cryptocurrency products such as Bitcoin, Dogcoin and Shiba Coin are not currencies.
This conclusion was issued jointly by seven ministries and commissions in September 2017, but today there are still many investors and related market researchers who are enthusiastic about these “coins”.
The main reason is actually one word: up.
From 2010 to 2021, the price of bitcoin rose from $0.1 each to $50,000 per level, a 500,000-fold increase.
Since the dog coin was introduced in 2013, the price has risen from $0.00026 per coin when it was issued to $0.50 per coin at one point recently, a cumulative increase of 1,923 times.
Ether, on the other hand, stood at a new high of $4,000 per piece this month.
The price has risen hundreds of thousands of times in a decade. In front of the interest, there are always people who are lucky even if they know it’s a drum roll. As for the “future trend” “technological change” and other not very clear high-end words, are to “up” the word this big meat skewer added some cumin.
So, these “coins” why will rise so fierce?
The total amount of unchanging
Without going into the technical principles, we only need to know that for each cryptocurrency, the total amount is theoretically constant. Bitcoin, for example, has a total of 21 million, which is not much, and can be interpreted as a “limited edition”.
After more than ten years, various topics and concepts have been speculated. All kinds of factors, resulting in these “coins” more and more ferocious, occasionally closed down, but even if the decline is far higher than the price you bought.
The trend is that more and more people hold them, fewer and fewer sell them, and they go up more and more, creating a cycle in which fewer and fewer “coins” are in circulation while the total number remains the same. In fact, the poor liquidity of many cryptocurrencies, including Bitcoin, is a well-known fact.
The distortion of supply and demand leads to further “demonization” of prices. As an example.
There were 5 students taking the test and 10 pencils.
Originally, there could be an average of 2 pencils each, and the supply and demand would be balanced and sufficient to fill out an answer key without any problem, and there would be a spare one.
But if 9 out of 10 pencils are held by one student. Only 1 pencil is in circulation, and the circulation rate is only 10%.
Then, the other 4 people will compete for that 1 pencil, resulting in a tight supply and demand for pencils.
The student with the 9 pencils will become the “richest pencil” among the 5 students by multiplying the value of the 1 pencil in circulation by 9 times.
In fact, Bitcoin’s liquidity crisis has been going on for nearly a year. Other types of cryptocurrencies have also been losing liquidity as their prices have increased.
The global economic instability caused by the epidemic has spiked over the course of the year, and even the arithmetic miners who mine the coins are reluctant to offer up the bitcoins they have mined, let alone those who have large positions in the press.
Of course, the tight liquidity is just one of the main reasons why cryptocurrencies are rising on top of each other. Some analysts believe that one of the reasons why dogcoin, SHIBA coin and other “cottage coins” have been so speculative in recent times is that bitcoin is so expensive that it costs too much to enter the market.
As for Musk’s recent comment that mining bitcoin “has led to a significant increase in the use of fossil fuels”, it can also be interpreted as the cost of electricity is too expensive.
An aerial photograph of a hydroelectric power station in Aba Prefecture, Sichuan Province, Sept. 27, 2016, shows a workshop built of blue colored steel plates, the so-called “mining site. Source: Vision China
What can I buy?
This weekend is the “Bitcoin Pizza Festival.” The 10,000 bitcoins that were used to buy 2 pizzas can now be used to buy 20 million pizzas at a price that will feed 30 million people.
The “coins” that can be bought have the properties of money. As of now, only some countries and regions around the world, including Malta, Estonia, Switzerland, Belarus, Singapore, Australia, South Korea, New Zealand, etc., are testing bitcoin payments.
Evobits cryptocurrency mining site in Cluj-Napoca, Romania, Jan. 22, 2020 local time. Source: Vision China
On September 4, 2017, the central bank and seven other ministries and commissions jointly issued the Announcement on Preventing Risks of Token Issuance and Financing, which clearly emphasized that tokens or “virtual currencies” used in token issuance and financing are not issued by monetary authorities, do not have monetary attributes such as legal compensation and compulsory, do not have the same legal status as money, and cannot and should not be used as money in circulation in the market.
On May 18, 2021, the Internet Finance Association, the Banking Association, and the Payment Clearing Association jointly issued a notice requiring member institutions not to carry out virtual currency transactions for exchange and other related financial services. It also requires that Internet platform companies shall not provide network business premises, commercial display, marketing and publicity, paid diversion and other services for virtual currency-related business activities.
The announcement said that virtual currency is a specific virtual commodity, not issued by the monetary authorities, does not have the monetary attributes such as legal compensation and compulsory, is not real money, should not and can not be used as money in circulation in the market.
Words to the wise ……
It is difficult to predict how these cryptocurrencies will move up or down in the future, but the risk tips have been out there for many years, so hopefully we can have a rational basic judgment.
Regarding risk identification, there are a few practical tips to share with you.
- If someone says “Blockchain technology is recognized by the state!” and then recommend cryptocurrency to you, don’t believe it, because blockchain technology and cryptocurrency are not the same thing.
- If you lose your hard-earned money accidentally, it will be very heartbreaking. Similarly, if it is used for investment, you need to be very careful. Understand the knowledge of investment, the value and principle behind the commodity. If you buy “coins”, you should at least check these trading platforms, where the company is registered, who the legal person is, what is the business scope of business registration. If everything is a question mark, how dare you hand over the money.
3, exercise, drink more water, keep a positive attitude, optimistic about every thing, on time medical checkups. (Text/ Huang Boyang, Yan Yuxin, You Suhang)
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/xinhua-have-you-heard-of-the-bitcoin-pizza-festival/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.