Bitcoin: The engine of the new financial system

Introduction: The virtual currency represented by bitcoin is the real disruptive power of internet finance.

It has been a while since bitcoin disappeared into the mainstream media in China. However, in other countries, the treatment of bitcoin is not so bad. Recently, the price has remained at around $ 600. On June 24, Switzerland granted legal currency status to bitcoin. On July 3, the Russian central bank issued a statement recommending softening tone to the topic of virtual currency. In short, bitcoin has not been overwhelmed by financial scams.

Looking back over the past year, bitcoin's market, such as roller coaster general, ups and downs. And its system is also a constant crisis, stolen again and again, the largest bitcoin trading platform Mt.Gox due to hundreds of thousands of bitcoin stolen and declared bankruptcy. Due to its alleged money laundering, central banks of all countries hostile or even banned. Back to the mainstream of the network of public opinion, the word of mouth is the statement - this is a new type of financial tricks, flicker to fool, worthless. The People's Bank of China has repeatedly issued a ban to ban Bitcoin transactions, prohibit third-party payments for bitcoin security.

In fact, just talking about this is a financial fraud that is not enough for the central bank to deny it. It is more harmful than it is. The central bank came forward with a position statement, and the ban was intensively introduced. This shows that the central bank that faces the enemy is paying great attention to it. However, this negatively reflects the value of Bitcoin's existence.

In my opinion, the future of virtual currency is very bright. It may revolutionize the financial system. So bitcoin as the representative of the virtual currency, what kind of demand? Why does society need virtual currency?

First, despite the financial globalization, the international payment system is highly concentrated and the actual financial power is in the hands of the state. US dollar hegemony, financial power is in the hands of the United States. The government can do whatever it wants to print currency to plunder the world economy. At present and in the longer term, no country can see the possibility of replacing the U.S. dollar with its currency. And any country's banknotes are in inflation, competitive devaluation. In general, there is no credible credit. Inflation is a looting of the people, but all financial institutions take it for granted.

The U.S. recently punished BNP Paribas for billions of U.S. dollars and imposed a one-year dollar ban on charges of engaging in deals with its rival Iran and violating U.S. sanctions. Political intervention into the financial sector, interference in the normal trading of other countries economy. In addition, the United States also uses its financial advantages to interrupt the international payment agency VISA and other payment cooperation with the Russian bank, kidnapping financial as its bargaining chip with Russia. Iran has long been sanctioned to sell oil and can not get repayments. Since then, the hegemony of the dollar has prevailed all over the world, with all its hesitation in power. The financial system that the world needs is a decentralized decentralized system that can get rid of the state's strong control. Without a certain currency as hegemony, this will enable the free flow of capital.

Bitcoin happens to do just that - an anonymous trading system, the currency of the world, accessible and freely convertible. Through it, international transactions can escape the financial controls of the hegemonic countries. Realize the free globalization of finance. The softening of Russia's central bank last week roughly illustrates Russia's dilemma - knowing both the risk of money laundering and the anonymous currency, but it could hedge the risk that the United States will block Russian banks from paying for their businesses. It is possible to replace the dollar hegemony, as long as the network, it can be transmitted. The clearest point of Bitcoin is that it must be collected through "mining", just like gold and silver coins, with limited supplies and a cut in half by four years. Is a veritable "deflationary currency." Although there is no national credit, but it itself has inherent design limitations.

Second, bitcoin is a good money laundering channel for gray income earners, and drug trafficking, casino deals, arms trade, etc. are also anonymous through this globally common channel. Notice Drug trafficking, arms trade, etc. have been the first few major categories of world trade, the transaction volume is alarming. Bitcoin can not be overseen by the national government lifted the concerns of central banks, worried about drugs, gambling, money laundering, etc. are trading, the financing channels will be difficult to block and so on. The purpose of bitcoin trading, above all, is to cater to this part of the gray and even the black industry chain, which can realize the free-flowing and anonymous demand of all currencies.

If the rise of virtual currency system represented by bitcoin is not only the dollar hegemony, but also the destruction of the printing rights of the governments of all countries in the world. No monetary authorities are likely to be willing to give up this lucrative banknote privileges. This is also a terrible thing for traditional finance, which is the destruction of it. After all, the development of the financial industry since the Second World War was driven by inflation.

In short, the virtual currency represented by Bitcoin is the real disruptive power of Internet finance.

Mainstream financiers have told iDoNews that bitcoin is a scam - it has no value other than power, and is not as decorative as gold.

Bitcoin as the representative of the decentralized virtual currency, is a financial fraud? Where is its value?

Is not this a virtual money coin game? Of course it can be said that the coin count is not a value? In the case of a demand-worthy attitude, it is understandable that the cost of digging for bitcoin mining software is the cost of purchasing the software. Why can not Bitcoin make games that make bitcoin a demand? of course can. Gold has ornamental value, Bitcoin, the same can have entertainment value. Although this is a joke.

In addition, once someone is really using virtual currency such as bitcoin to exchange items, they have their own value because it is recognized. As a software development, some people, there is value. In fact, the potential demand for trading virtual currencies such as Bitcoin is very high.

So what is the value of it? At least a balance of demand and supply. It costs a considerable price to produce it. Bitcoins, etc., can be considered as "generic equivalents" rather than as credit currency. It does not require any state agencies to credit, its own production includes the "labor value" in it. Its production cost is the basis of its natural credit. Electricity consumption, server depreciation consumption, software development, personal maintenance, etc. constitute the labor value. It is the network gold that can be transmitted at high speed with the flow of network information.

However, I'm not saying that bitcoin really can completely replace traditional finance. It also has its own obvious drawbacks. First, only network applications, or difficult to move. Second, it is a deflationary currency, and people tend to store rather than circulate. For a design that halves Bitcoin production by four years, it will appreciate forever, and today's gold is not for shopping, but for the library in the vault - gold dug out and buried back. As the last reserve of currency, bitcoin may face this fate. Third, some mining groups may have realized a monopoly, control prices.

The emergence of virtual currency represented by bitcoin is a subversive attempt of Internet finance. The controversy is far from over, and I am afraid we will not see the moment when it fell on its own. It does not die, there is hope. It is not important for the mainstream finance people to deny it. Its creator Nakamoto is a very low key person. He only silently provided the basic frame of bitcoin with his own creation, leaving the debate to others . The future of finance may belong to the virtual currency, bitcoin is just the beginning, open the trend of the free currency, and now imitate bitcoin coins have been flooding. Their highly active innovation activities are the source of power for the new financial center to be decentralized in the future.

(Author Jiang Hongzhi, debut to iDoNews column, please indicate the source and source.)