Xu zhe, financial expert at paypal financial dialogue: the value of bitcoin is not based on consensus, but on its unique accessibility

Original title: "how to deal with volatility risk before bitcoin is halved"

Paypal finance

The accessibility of gold is based on physics. The accessibility of bitcoin is based on mathematics. Which is harder, mathematics or physics? Math is going to be harder. This does not mean something based on human opinion, it is a "fact", not a "will".

When it comes to the value difference between gold and bitcoin, xu said this is quite different from the common view that bitcoin is regarded as digital gold.

On April 9, zhouli broadcast its first live broadcast. Xu zhe, a financial expert and first-line trader, an important participant in the early bitcoin community and founder of qimiao capital, talked with Yang zhou, founder and CEO of paypal financial, to discuss how to cope with the huge volatility of bitcoin. Xu zhe has a column on zhihu, explaining his understanding of the financial market and analyzing various trading behaviors, which has attracted a large number of fans. At the same time, he also has a deep understanding of bitcoin and is personally involved in mining machine investment, using financial instruments to manage the returns and risks of mining machine investment.

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In this conversation, xu gave many unique and valuable views on bitcoin, just to name a few:

, & have spent The bitcoin crash is not a change in value fundamentals, but a drying up of dollar liquidity, creating a "dollar vacuum."

, & have spent Bitcoin's value is not in hedging, but in its unique lack of access.

, & have spent The accessibility of gold is based on physics. The accessibility of bitcoin is based on mathematics. Which is harder, mathematics or physics? Math is going to be harder. This does not mean something based on human opinion, it is a "fact", not a "will".

, & have spent The value of bitcoin lies not in the consensus, but in the fact that bitcoin USES something hard to guarantee its accessibility, not that many people believe in it. This is different, one is hard, one is soft -- people's opinions are easy to change, but the laws of physics and mathematics are impossible to change.

, & have spent No one has more than ten years' patience in handling this matter; Bookmakers exist, but the fact that they are simply taking money from irrational people on the swings is not the fundamental reason why bitcoin has become the best-performing asset in a decade.

, & have spent For the miners, cash flow management and risk management are top priorities now that they have chosen heavy asset management. It was a matter of life and death for the miners.

, & have spent The clearing system under the dollar-dominated system is not cracked, it has collapsed by half, so this could be an opportunity for bitcoin.

The following is part of the dialogue excerpts, reviewed by teacher xu zhe, whether as investors or miners, I believe that you can find their own recognized wealth password. Enjoy ~

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The dollar vacuum has caused bitcoin to plunge

Taylor-robinson:Please ask teacher xu zhe to talk with us about the understanding of the causes of the bitcoin crash.

Teresa hsu chih:Now the whole market is still priced in USD. When people pay attention to the market, they should not only pay attention to BTC, but also pay attention to USD. On March 12, in fact, the digital currency market did not have any particularly big changes, but the dollar market that day had a relatively big impact, that is, the United States stocks continuous circuit breaker. This tends to cause a stampede of derivatives, and a stampede of strategies, to create the effect of a liquidity black hole for the dollar, which then causes all the assets in the city to plummet -- not just bitcoin, but all the commodities against the dollar to plummet.

Taylor-robinson:Yes, including insurance, options, are all in the state of decline.

Teresa hsu chih:This is not a big change in the value of the assets themselves, but a drying up of dollar liquidity. To put it simply, because U.S. stocks are highly derivative, they require us to cover our positions in a very short period of time, otherwise investors will not only blow up their positions, but also have other legal liabilities.

At such times, major investors in U.S. stocks around the world need to convert what they can sell into dollar cash as quickly as possible.

On that day, as you can see, there was some shock in the dollar interest rate market, and the dollar index was very high. The dollar index is based on the exchange rate of the dollar against other major currencies. A dollar index above 100 means that the global dollar is flowing back to the United States. There are two main markets for the dollar. One is the us dollar market, which the fed can intervene in, and the other is the offshore dollar market, which is the eurozone dollar market. So, when we see the dollar index suddenly explosion, and the dollar overnight interest rates to rise, this means that the dollar liquidity happened is similar to a vacuum state, including gold and other commodities, and some bonds, debt - because debt even basically can be understood as cash equivalents, the sell-off in the day.

It's an incredible thing.

Since the fed USES treasurys as the main asset on its balance sheet, they are almost as safe as cash, so even a sell-off of treasurys would be proof of only one thing -- that people don't want any assets, just dollar cash -- to cover their positions.

It is too late to sell a house on the spot to cover a position when everyone needs cash in dollars. I'm going to throw out something that's going to turn into dollars in an instant. Both gold and bitcoin are such liquid assets that they have all been slaughtered.

The carnage is also because bitcoin is now trading more contracts, and there is some leverage, like futures, forwards, perpetuities, and options, which are very highly leveraged. In this case, the leverage also trampled on each other, which created a vicious circle.

When highly leveraged bitcoin long contracts are forced to level off, the market is dumping bitcoin in large quantities, blowing up the next level of leveraged contracts and clearing out other related derivatives, creating a stampede.

Perpetuity contracts are all the rage in the bitcoin world right now. A perpetuity contract is actually a SWAP SWAP that we call SWAP. SWAP means I'll take my bitcoins and SWAP your dollars now, and then I'll SWAP it back 8 hours later, and if you don't, we'll have to pay interest. But at a time when the world is desperate for dollars, you can't get it back, so you have a shortage of collateral, and then the interest goes up, and then the interest goes up, and that triggers arbitrage, and that triggers arbitrage, and that triggers illiquidity, right?

At the critical moment, the IT of several bitcoin exchanges also failed to keep up, stopped trading under the impact of relatively large traffic, suddenly maintained, and then caused the liquidity provided by arbitrage disk to fall behind. And that's when the tragedy happened. So, in essence is not to say that the currency of the fundamentals have taken place in a big change, but the back of the BTC/USD USD liquidity out of the big problem, and since the derivatives lever heap of COINS ring itself too high - rise all the way up, because before COINS ring the optimism for the currency has reached a more outrageous, the currency forward premium is high.

Currency lending market, such as paypal to do this thing, you use the currency of the lending market USDT financing, do more COINS to leverage, with forward contracts with leverage, including sustainable futures and over-the-counter swaps to do it, they can create a leverage effect do many COINS, both the cost of capital can't bad too much, otherwise it will cause a risk-free arbitrage.

So, the premium rate that we get for forward contracts on the larger exchanges, which we can basically invert, is what is the approximate rate at which cryptocurrency markets lend to each other? The premium is so high that people are willing to pay a lot of interest to deleverage long, which is bullish on bitcoin.

The build-up of leverage is enormous, given the high level of blind optimism and the spread of contracts on exchanges. So the trigger was a dollar liquidity vacuum, and then the amplifier was an overuse of leverage contracts and an upsurge of blind optimism, and the final round of carnage was the selective failure of the exchange's servers.

When these three things happen in sequence, you see that bitcoin is going to crash, and that's basically what happened.

The dollar liquidity vacuum is something that the fed didn't do well, because the fed saw at the time, the dollar vacuum led to a collapse in global assets, and then they used more traditional tools, one was to cut interest rates, to bring the dollar down to zero; The other option was to expand the balance sheet, repurchase U.S. Treasury bonds and mortgage-backed securities, and then reopen the interbank discount window, and let the Banks boldly fund themselves, which is the fed's rediscount window, and then the fed's rediscount window, which is for primary dealers and Banks.

At that time, people were in a panic. The federal reserve gave money directly to primary dealers and Banks, and they were afraid to put money into the market. Because A primary dealer is like A bank, A reverse repurchase of Treasury bonds on our a-shares, he is unwilling to borrow in order to earn you an overnight interest rate, which is almost zero, in the face of the risk that the fund or the dealer will blow up.

When bitcoin crashed in March, did any of you lend money to a highly leveraged one? None of you would want to borrow it, exactly the same thing. The fed was willing to release that money that day, but it expanded its balance sheet so much that it provided virtually unlimited funding to primary dealers and Banks at the rediscount window. But primary dealers and Banks were reluctant to pump money into the market for funds that were already on the verge of being sold out, so the fed's economic operations did not help that day. This has led to a period of very tight dollar liquidity.

As a result, the price of bitcoin has been slow to recover. The federal reserve recently fixed the problem, so the price of bitcoin is backed by cash. Because the fed has now essentially broken some rules, bypassed the banking system and the system of primary dealers, and gone straight to the market and bought dollar bonds, which means that the fed's money has been pumped directly out of nothing into corporate balance sheets, and dollar liquidity has returned to the market. So, we see that the price of bitcoin has also recovered -- you have to buy it in USD for the BTC/USD index to go up.

This cannot be done if all the world's dollars are disappearing. Now all the dollars in the world are made by the federal reserve, so if the channel of the federal reserve is blocked, there is no USD for BTC/USD to buy, so there is a crash.

Taylor-robinson:We also noticed at the time that the fed's balance sheet was rising at a straight line, but the global money supply, particularly in dollars, was actually falling. We've noticed that not only bitcoin, but the world's most safe-haven assets, including gold and the dollar, are falling fast. In short, it was the dollar liquidity vacuum that caused the global market to plummet in the process, and bitcoin is just a microcosm of that. As a small market, it will have a longer slump and more intense intensity.

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What is the value of bitcoin

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M xiaoping:What about bitcoin's role in this crisis? Since the collapse of bitcoin, the price has returned to the position almost before the collapse, and it has been moving very fast in all investment categories.

Teresa hsu chih:As an asset, bitcoin actually didn't do very well, in this round, because it basically didn't act as a substitute for the traditional monetary financial markets. If we want to evaluate an asset, it is not rational to only take the rise and fall as the basis. The key is to see whether the asset should play a role in the process of allocation.

For example, if you invest in Treasury bonds, you don't expect to get rich on them. I'm either betting that interest rates keep going down, or I'm betting that I want to get a fixed return. You can't say that Treasury yields haven't been as good as stocks this year, and then you can say that Treasury assets haven't done well, right? This is not appropriate.

We just need to assess whether the design of the asset is successfully linked to its objectives.

As for bitcoin, I don't think it has played a good role in hedging traditional financial markets. Bitcoin was designed to be an accounting system in which humans could trade the fruits of their labor without relying on central Banks. In this crash, bitcoin was not designed to be.

Taylor-robinson:Paypal financial's financial markets research division also looked at the correlation between bitcoin and gold over that period -- measured in 52-week weekly charts -- which was actually at an all-time high, more than 49 percent relative to gold, and near an all-time high relative to SPS. In the longer term, the safe-haven nature of bitcoin has gained some prominence.

Of course, because of the liquidity crisis, there was a drop in bitcoin, or the entire market, including mainstream safe-haven assets such as treasuries and gold. As a 7 x 24 hour transaction, bitcoin is another asset class that has no regulation and no circuit breakers. From my perspective, bitcoin's performance is ok and still reflects a risk-off property.

Teresa hsu chih:Gold's flight to safety this time around is also over. Gold was supposed to be a safe haven, but in this case, it also fell all the way down because of the dollar liquidity vacuum. So the argument that gold is a safe haven is also false.

Taylor-robinson:On the other hand, the risk-off property of these assets lies in the risk-off property of some geopolitical events, or events such as sovereign credit default, but it seems that no asset is immune from liquidity risk, or that no snowflake is innocent.

Teresa hsu chih:In the context of this dollar liquidity vacuum, one of the main factors affecting bitcoin and gold is that two things are so liquid that they are more exposed to speculative markets than to geopolitical risk.

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Taylor-robinson:Because bitcoin is extremely liquid, and then the other thing is that it is extremely sensitive to monetary policy, and then there will be more and more money coming in, or speculating on these two assets.

Teresa hsu chih:I've always disagreed with the idea that gold and bitcoin should be classified as safe havens. In the case of risk events, they haven't really turned out to be risk-averse, and I've never considered them a risk-averse asset. If they were seen as a safe haven, they would have failed.

But the reality is that bitcoin is not a failure. It has gone from less than a cent to more than $7,000 in the decade since it began trading, and it has done better than any asset in that decade, not as a hedge.

Since 2009, 2010 and 2020, it has been one of the few times in human history that GDP growth has been very fast, with no major wars or natural disasters. This is arguably the best decade in human history, and it is also the decade in which bitcoin has accumulated wealth crazily. So I've always disagreed with the notion of bitcoin as a safe haven. The value of bitcoin is not a hedge.

Taylor-robinson:Both gold and bitcoin are consensus assets that do not generate cash flow and have no upward valuation. Are these quasi-currencies, these consensus-based trading assets more a response to human trade activity, to GDP, or to M2?

Teresa hsu chih:M2. Because M2 is actually more influenced by central Banks, it's not really related to the size of the human economy. If you look at the ratio of M2 to GDP at the people's bank of China, and M2 to GDP at the federal reserve, you'll see that the ratio is very different. Similarly, under a certain GDP growth, the growth rate of M2 can be much faster than that of GDP, so it is not appropriate to use the indicator M2 to measure.

Bitcoin is not like gold, it is not a pure consensus, it has something else in it. Bitcoin's accessibility is not guaranteed by the same mechanism as gold's accessibility. The reason why gold is not easy to obtain is that during the formation of star classes, the element with the number of protons greater than 56 is not easy to precipitate, and it cannot be formed in a more normal environment. Therefore, its difficulty in obtaining is that no one can have alchemy.

Bitcoin's accessibility is different. The difficulty of obtaining bitcoin lies in the irreversibility of the hash algorithm. So, if bitcoin and gold are all about consensus, I think it's better to say that they've both found a hard property that's hard to come by, one based on physics, one based on math.

You want to say which is harder, math or physics? I think the math is going to be a little bit harder, which is that the irreversibility of the hash algorithm is going to be a little bit less than the probability that humans are going to change the number of protons. This doesn't mean anything based on human opinion. It's a fact, not a will.

Everyone thinks that consensus is based on people's opinions about a thing. I don't think so. I think what makes bitcoin and gold something that people are willing to pay for with real money is that it USES something very hard to insure that it's not easy to get, not that many people believe in it. This is different, one is hard, one is soft -- people's opinions are easy to change, but the laws of physics and mathematics are impossible to change.

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How does mining use financial instruments to deal with uncertainty

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Taylor-robinson:As a very niche product, bitcoin is still highly volatile. Are there options or other ways to get miners or mine owners to deal with the risk of high volatility like bitcoin?

Teresa hsu chih:I've been doing this for the better part of a year about using options to manage the price risk of bitcoin.

We can think of pools as producers. We do this a lot in traditional finance, copper, aluminum, nickel, including oil fields, using options to manage price risk. For the producer, the call option is usually used to enhance its return.

For example, if the oil field costs $30 to produce, and the current price is above $35, he might short a $40 put option. If the price doesn't reach $40 a barrel, the premium on the option is free income, and if it does, it's delivered at 40.

If the price of crude oil were to drop to a low of twenty dollars a barrel, the $40 of options he had sold would be his income. The money has accumulated over time.

That's the idea I'm applying to bitcoin mining. I also bought a bunch of miners and placed them in a friend's pool for safekeeping, and then I took a short position in the call option. It turned out that after electricity, the income from the option was higher than the income from the miner, so I was satisfied that I had some protection against my safety point.

Then the friend of mine pool said to me, can you extend this service to other miners, let other miners also enjoy the extra benefit. I agreed. Later, bitcoin went all the way up to 11,000. Since I was short, when bitcoin went up, the options and futures accounts lost money. Overall, miners are better off in dollar terms than out of the loop. However, the miners are not satisfied, because the miners believe that the price of bitcoin is bound to fly. So, a lot of people said, "let's not do this. It's not going to make me rich." Some miners later withdrew their short positions, and it was difficult for them to pay their electricity bills after a bitcoin crash.

Therefore, I think miners as a heavy asset investors, should not be too blind to the risk. That's what I've always said: if you buy some bitcoins to invest over the long term, price fluctuations can be ignored, as long as we're not leveraged. However, as a fixed investment heavy role, miners have always had cash flow disbursed, the electricity bill is in fiat currency, so it is necessary to manage the risk of BTC fluctuations on fiat currency.

Mining income, is to take a fixed investment is not easy to withdraw the risk to return income. Mining does not generate profits out of thin air, it has compensatory effect. Any enterprise with heavy assets as the business model, it is in need of liquidity risk management. A lot of miners don't have this awareness, he's just bullish on bitcoin, and then mining with the benefits of bitcoin, he comes in and does it, but there's no management of liquidity risk, which is wrong.

M xiaoping:Many miners may not be good at hedging with these tools. In addition, the selection of models, the iteration of machines, including the transformation of water, can also avoid some risks. What can miners do to cope with such fluctuations?

Mint: for half the uncertainty, as a miner, there are some strategies to deal with.

First, you can iterate over this model. At 60W/T, it might be relatively dangerous after halving, so you can iterate over the mining machine into a relatively new model under the premise of doing your best. It doesn't have to be S19 or M30, which is a higher price, but try to be closer to the front, maybe within 50W I think is a safer threshold. This is the first point, to iterate over your own models as much as possible, provided that you don't have good enough electrical resources.

Another way for ordinary miners is to use some financial strategies to guarantee their cash flow at a certain stage. Just like teacher xu said, you can use options to do some hedging. Now, miners have two kinds of relatively financial means, one is insurance, in the expectation that the entire market may be a big or small fall, can choose to advance money to sell, and then into cash flow. This is to ensure that miners have a stable and adequate cash flow.

For older miners, this halving could be both a risk and an opportunity. I worked in coinage for 13 years, and in 19 years, I transformed to mining industry. I actually have more experience in the upstream and downstream of the whole ore circle. Now we can see that there are more and more institutions that own power plants, and they may be more and more interested in mining. So mining has slowly become a resource-based industry. For this kind of big miners with resources, in fact, they can buy some machines with high power consumption before and after halving the price, because this part of the machine must be relatively cheap, so they can carry out some of their own resources replacement.

For the new entry of small and medium-sized miners, everyone in fact in the stability of cash flow at the same time, on their own good money. It is still a bear market, and long-term returns from mining are faster than in some real sectors. The payback period for investing in mines now, for example, is less than two years, so more cautious miners can opt to cut their output in half. Halving the initial risk may be relatively high.

I've had two and a half cycles in my career, and I'm going through my third cycle. In my experience, bitcoin must have some support of its own value in the long run. While stabilizing the cash flow, people can hold the bitcoin for a little longer.

Xiao ping: does Yang zhou have any other advice for the miners?

Taylor-robinson:I actually do not have much mining experience, I am more financial understanding. As teacher xu said, in the rising market, miners began to get high, and then panic in the fall.

The original miners may have come more from other industries in the past, but as the price of bitcoin gets higher and higher, many miners are becoming more specialized. Are some miners willing to choose some products of the options portfolio to hedge the risk of its entire production and the sale of bitcoin?

Mint:There's a demand for this from miners, and if you're hedging with options, it's certainly going to be a relatively higher return, and then you're going to be able to hedge some of your risk. Some people in the industry have come up with some solutions in this direction before, but they haven't developed a way to scale and systematize, so if we can find a good solution, it is actually a good benefit for the miners.

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Xiao-ping: so, after the half, will there be some new impacts on the miners' ecology and on the industry as a whole?

Mint:We're going to look at it in a couple of ways, one is the miners, one is the development of the mines, and then we're going to look at the derivatives, and then we're going to look at some of the policy dividends.

According to our observation, the weight of miners in the market may decline. Because the chip industry has reached a technological bottleneck, somewhere between 5 and 7 nanometers, it is expected that the next generation of mining machines will be such chips, which will take longer and longer to run. Models like the S9 are now on the market for about four years. In the future, for example, the 5-nanometer, 7-nanometer mining machine may be on the market for a longer time.

Now that the chip technology has reached the point where there is no way to further improve, mining machine manufacturers may develop in the direction of, for example, bitcoin mining machine, it may be some of the power and battery energy and other aspects of optimization. Later, it may develop into various software services.

Another is the copycat coin mining machine, before has been a mining machine manufacturers to fight for an aspect, like the recent launch of a number of relatively hot small COINS. This also belongs to the future of some aspects of the layout of the chamber of commerce. I think miners will only develop from these two aspects.

For the mine, in fact, there is already some restructuring of resources. The owners of the big mines are basically deeply tied to the power resources. In the future, I think there will be oligarchs in the mines, oligarchs will have a say in the hydropower industry, and they will be in the hands of such institutions. We have also seen recently that more and more institutions of this kind of resource prefer to be deeply involved in mining themselves, because they can replace the resources.

In terms of policy dividend, we can also see that some places in sichuan last year encouraged big data and cloud computing enterprises to enter through the form of policy industrial parks. The government of ganzi prefecture in sichuan province, for example, has opened an industrial park to promote big data and cloud computing, in an effort to offset the local government's energy surplus.

The meaning of "water", is the local water and electricity resources if they are in the same time, there are a lot of consumption, you can't get rid of electricity to after more companies to consume less energy, and these resources without electricity, and resource waste in vain, so they are very encouraging cloud computing as well as the mining industry to move into industrial park. These are policy dividends. Although the economy is not doing as well as it used to, the policy stimulus from these local governments is helpful because the mining industry can also bring some benefits to the local area.

In the past year, the derivatives industry, like paypal, has developed rapidly, which is also related to the development of mining industry. Mining industry needs very specialized services for financial derivatives, so the whole market space is relatively large.

Therefore, according to my predictions on the mining industry, the mining industry will be more specialized and planned in the future, and those who have a say in resources will gradually become oligarchs in this industry. This also brings the risk of uncertainty to the iteration of new and old miners in the industry. At the same time, it is also an opportunity, who can quickly master the scientific management of the mine, improve the operation efficiency of the mine, provide better service to everyone, and lay a good position in the industry in the future.

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Review the halving event

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M xiaoping:2020 could be the year of history. Xu zhe teacher how to halve the market?

Xu zhe: halving does not cancel the supply of bitcoin. Halving only means that the number of mining rewards per block has halved, but the supply of bitcoin is still growing. It is not scientific to say that the price of bitcoin will go up just because the supply of bitcoin is growing at a slower pace. We have to look at supply and demand. If the demand doesn't go up, the supply is still going up, but the supply growth rate is slowing down, and you say that this thing is going to go up, that doesn't make sense.

You also cannot because before a few halve all rise, think this halve must rise, this also is unscientific. Nor is it rational to leave your financial future to such inferences.

If you look at the future value direction of bitcoin, from the point of view of supply and demand, now we know that its supply growth is slowing down, but it's still continuing to supply, and then it's important to look at its demand side. So it comes back to the supply and demand of bitcoin.

The halving of bitcoin is slowing the growth of supply. Has demand increased? It all depends on who is using bitcoin. Speculation does not generate real demand. Futures have no increment and no real demand if they are more than an empty pair. So there are things that might increase liquidity, might increase volume, but they don't change the true relationship between supply and demand.

We still have to figure out who's using bitcoin? Who needs bitcoin? We bought all these machines for mining, real money, and then we used real money to buy electricity to maintain the power system, so that he could run, so that the accounting system could work. So who is using the system? When I looked at it, there were people using the system, the people who had been left behind in traditional finance: the people who didn't want the government to know much about them, and the people who were being kicked out of the dollar system.

The iranians do use cryptocurrency in China to do cross-border trade clearing, and they don't do very strange business, just normal daily life transactions, and then they do use cryptocurrency to do clearing. This is his real need. But, unfortunately, in the case of an epidemic, all countries face the problem of economic decline.

The price of bitcoin has fallen from five figures to 6,000 or 7,000, and part of the reason for that is the fact that the amount of trade that is being accounted for in bitcoin is also falling. This is essentially fisher's formula. So we could just go backwards, which is that the amount of money times the velocity of flow is equal to the price of the money in liquidation times the amount of money. The total market value of our currency is affected when the supply of money does not change significantly, the quantity of goods used for liquidation decreases with the total value, and the rate of flow does not change much. So it's just that our supply is slowing down, and it's slowing down, but that doesn't mean that bitcoin is going to go up, so you have to make sure you understand that. & have spent

I was just talking about mining. I was originally a computer major, and I said that 7 nanometers is the limit, because if you go any smaller, you will encounter the impact of quantum properties, the circuit has been small enough that a single electron through, there will be uncertainty principle. TSMC says they're working on 5 nanometers, which is not a sure thing. Don't be too confident, that is to say, to 7 nanometers to the end, in case the other people out of the problem of smaller nanometer, how to do?

And it's not just the chips getting smaller. At a time when we thought that integrated circuits could only be made smaller and smaller, several key techniques were developed to improve the computing power of chips, including the replacement of several instruction sets and some cpu-level optimizations. The ways to improve efficiency are likely to be multiple and cannot be considered from this direction alone. Of course the properties of quantum are very hard, there is no way to go beyond this level.

With respect to the mining algorithm and the logic of rewards, the very market-oriented mining will not have no benefits, but the mining benefits will definitely converge. The halving doesn't really change that dynamic, so when satoshi nakamoto designed this reward system, he knew the market.

If mining this thing does not have the profit, will have the miner to exit gradually. After the miner exits and the difficulty of digging is reduced, the miner gains. However, if the mining yield is high, it will cause the capital to flood in, and once the capital flows in, the mining profit will be lost. Cut in half or not, or even to a quarter next month, the dynamic balance of the mining industry is still there. Therefore, the original design of this system is not to make the miners rich, not to let the mining this thing will be useless. The system is designed so that mining can keep bitcoin safe. That was the goal of the design, and it worked.

For anyone who invests in bitcoin, it's about lowering expectations, not thinking of halving it as a savior, but as a sure chance to make a fortune. For the miners, cash flow management and risk management are top priorities now that they have chosen heavy asset management. It was a matter of life and death for the miners.

Don't choose whether or not to protect, immediately study how to protect. Over the years, I'm actually surprised that people haven't done this. I was surprised to see miners basically running naked, buying machines, getting electricity, and waiting for the price to go up.

Most of them are in us so you have to pay attention. And then there are the speculators, who are pushing the lever up to this point like crazy. In COINS sometimes make risk-free arbitrage, can make a lot of profit, I was more surprised, as you can see the currency futures premium with COINS present price, in fact I buy currency spot, and then a short currency futures, I could get the risk-free return USD standard is far higher than the risk-free rate of the dollar on the market.

This is something that is considered impossible in finance, but it just happens. What does this prove? Proving that investors are far more bullish and irrational in the bitcoin market than anywhere else in the world's financial markets. So, it's important to note that bitcoin is a good thing, and its value continues to grow as the demand for clearing outside the dollar system grows.

I would also like to debunk the idea that the rise in bitcoin is a hoax, a scheme pulled up or manipulated by bookmakers. No one can be patient for more than ten years. This thing can go from a few cents on less than a dollar, or even a penny, to six or seven thousand dollars now.

Bookmakers exist, but the fact that they are simply taking money from irrational people on the swings is not the fundamental reason why bitcoin has become the best-performing asset in a decade.

So, you need to be reasonable, as a non-heavy asset, the ordinary bitcoin investors, to look at its long-term value, to study the current clearing of all non-dollar banking systems in the world, how to evaluate the total demand? Is the market in an irrational frenzy?

For miners, has selected heavy assets to obtain certain profit space, you need to know to you, you like ordinary investors is not, your liquidity risk management is an awful thing for you, you don't have that in can attack and defend, difficult to leave you, you have to be in the inside of your mill has become a fixed asset investment.

And don't think that mining is a sure way to make a fortune, because the mining system itself is designed to be used in a dynamic equilibrium of the market - mining must be profitable, but it does not mean that any time you go in there is profitable, and mining won't let your earnings grow indefinitely, it will be dynamically adjusted.

Halve also don't be pessimistic, as if after halving the mining did not have to do, not so. Because the design of this mechanism is dynamic balance, so even if constantly by half, this industry is still often can have the profit space, and then also won't have too much profit space, because its entry is not high, we managed to buy mining machine to mine, then add a mining pool, can be involved in, so it is a very market. It is not like the federal reserve, only with his member bank to primary dealers provide direct injection of liquidity, shareholder bank with money creation process, we ordinary people can't be involved in the process of dollar COINS, but the currency is an open system, all people can participate, that means he will reach the market cost.

Miners should not be too enthusiastic, nor too pessimistic, and should be good at risk management.

Friends who invest in bitcoin, including long-term investors, should not be too optimistic or too pessimistic. They should not think that when bitcoin rises, half of the market is the savior, and they should not think that it has fallen to 3,800. Lingering in the midst of ecstasy and disillusionment can rob you of wealth back and forth.

We should be calm and objective to look at half. Without halving the amount, the cap on the total amount of bitcoin is impossible to control. It is the case that the upper bound converges to the unconvergent case of an geometric sequence by constantly halving. So, halving is a very common and normal thing to do, don't overstate its significance. That's my view on halving.

Xiaoping: about half of this thing, do you have a judgment of the market after half?

Taylor-robinson:The mining industry is becoming specialized and institutionalized, and then there will be a lot of risk control and liquidity control, and more use of derivatives. Personally, I think the volatility of bitcoin will gradually decrease and the price will still rise after it is halved. Although it is a bit like what teacher xu zhe said, I personally prefer this view, because it is a very good story, which will attract more people to come in and increase the demand for bitcoin.

Mint:I think after halving, is a short period of time may be a small rise, and then will encounter a big drop, such a market. After predicting that it won't rise by half, there are a lot of miners, investors in the industry, who will have a little bit of a loss of confidence, so it will cause a wave of declines. Finally, the market is bound to be dynamically balanced and the long-term trend is for a slow rise.

I'm looking more at the miners' perspective now. Although miners do not have much influence on current prices, the big miners' confidence in the industry and some of their views on mining can influence spot prices to a certain extent. So, my judgment is that after the halving, if the mining industry does not have a clear direction of direction, there may be a round of decline, and then, eventually will be smooth, and then slowly rise such a process.

Teresa hsu chih:There are many factors that affect the future price of bitcoin. In the long run, it depends on the amount of clearing in the non-dollar monetary system. I am optimistic because, in recent form, counter-globalisation has inevitably begun. Once the us-led globalization goes in the opposite direction, the demand for global settlement of non-dollar system will soar in the future. However, since the epidemic has greatly changed the course of human history, the probability of the future human economy heading for the great depression is also very high. The two cancel out, and it's hard to tell which one is stronger.

So to sum up, first of all, the dollar system is facing a big challenge right now, and the federal reserve's balance sheet has grown from $4 trillion to $6 trillion, which is similar to bitcoin which was offering 21 million, and now it's offering 30 million, which is a big problem.

Another is that the amount of us debt has soared. After the end of the bretton woods system, the current dollar monetary system is only 50 years old. Fifty years is short. A lot of people criticize bitcoin, which means it doesn't look like fiat here and it doesn't look like fiat there, so it's not a currency. This is ridiculous. Because the monetary system is only 50 years old, and it's not doing so well, the system faces a big challenge.

And even if the system works, non-dollar forces are growing, which means that the trump-led counter-globalisation has inevitably begun, and this outbreak is actually accelerating.

Everybody if attention is the international current affairs, trump made it clear that in this outbreak, drugs and breathing machine, face mask and other medical supplies, including medicine raw materials depend on the made in China, it is proved that in the past the global supply chain to bar China from joining the WTO is such a wrong decision, so the world will go to China, to the globalization, this is a trend of obvious. And the United States and other countries are already doing it.

At both ends, the clearing system under the dollar-dominated system is not cracked, it's already halved, so this could be an opportunity for bitcoin. But bitcoin is only one of the options for clearing global non-dollar currencies. With so many options in the future, it's hard to say that bitcoin will necessarily win. Personally, I'm a long bet.

Bitcoin has promise in asset allocation, and I don't see any problem with it at all. But if you ask me to promise, "it must be bitcoin that replaces the currency exchange system," I don't have such a strong belief. That's true. So the future price of bitcoin depends on a number of factors.

Judging from the general trend, this may be a time when heaven is dead and yellow. But was it the yellow turban who had the last laugh? Sima yi? Don't be too confident. Be careful about asset allocation. Bitcoin is a very promising candidate, but you say it must be king in the future, not necessarily.

In fact, when bitcoin came out, it was a big surprise. No one ever thought of doing currency clearing in this way. This is an unknowable thing, and because humanity is growing faster and faster, it is highly likely that in the future there will suddenly be a clearing system better than bitcoin that does not rely on a central counterparty system.

We can't rule it out. That's my view on the future price of bitcoin.

Original link:https://mp.weixin.qq.com/

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