● Animal spirits A
concept written by the famous economist Keynes in his book The General Theory of Employment, Interest and Money to explain why humans make irrational and uneconomical decisions early on.
It explains that there is a wild impulse behind the'irrational decision' that causes asset bubbles such as the Tulip Bubble, the Great Depression, the dot-com bubble, and the housing market bubble triggered by the subprime mortgage.
Bitcoin is the target of investment these days dominated by this wild impulse.
What kind of target is the bitcoin investment, which is seeing a dizzying price fluctuation, and is showing a wild impulse?
● Is cryptocurrency like Bitcoin the future currency?
Those who are optimistic about the possibility of Bitcoin's role as a currency are promising that a cryptocurrency using blockchain technology can decentralize the central bank's power and establish itself as a future currency.
However, when looking at the comments of people who can have a great influence on the global financial market, we are putting emphasis on the fact that there is almost no such possibility in common.
"Bitcoin is very inefficient in conducting transactions. The amount of energy it consumes is huge, and it is often used for illegal financial activities." (Yelon US Treasury Secretary)
"Bitcoin is not a currency. The European Central Bank will not buy or hold Bitcoin."
(Governor of European Central Bank Lagarde)
"A cryptocurrency like Bitcoin has basically no value and produces nothing."
(Warren Buffett, Founder of Berkshire Hathaway)
"Bitcoin doesn't offer interest or dividends like bonds or stocks. A lot of people are buying it for ridiculous prices."
(Professor, Lubini Graduate School of Business, New York University)
In short, Bitcoin itself is an asset that has no value.
Bank of Korea governor Lee Ju-yeol also attended the National Assembly's Planning and Finance Committee on the 23rd and said, "Bitcoin is an asset with no intrinsic value, so it will show high price volatility."
If it is an asset that has no value on its own, it can function as a'money' only if it can be used as a means of trading.
So, what role should money play?
Just as there is no place to accept the 10,000 won book we use for the Blue Marble game to buy things, it must be usable for transactions in order to become currency.
Even if the counterparty does not want to receive it, it must be compulsory to become fiat currency, and the key is price stability.
Bitcoin, whose price changes after sleeping, has never had this stability, and it will not be possible in the future.
The reason is well explained in the comments of the figures cited earlier, so I will not mention it again.
Another reason it is difficult for Bitcoin to function as a currency is that it is an out-of-system asset that is traded completely anonymously.
Anonymity is also the reason why it is actively used in the illegal trading market, which means that users do not receive any protection.
Not only can no one know properly what is happening on the virtual currency exchange, and even if there are users who have suffered damage during the transaction process, they cannot receive institutional protection.
Even if it is illegally adjusted in market prices, traded with illegal organizations, or received investment from investors in a state of lack of liquidity, it is not protected even if it has suffered damage.
Among the actual cryptocurrencies,'Tether' and the cryptocurrency exchange, which were evaluated as close to digital currency, recently revealed that they illegally concealed losses in the New York State prosecutors' investigation. There is work.
It was also revealed that domestic investors invested 70 billion won in a company that tricked investors and intercepted large sums of money by saying that investing in cryptocurrency can make big money.
Tether linked 1 coin to 1 dollar and issued it as if it were a stable coin, and many cryptocurrency investors also fraudulently linked tether when buying bitcoin.
▶I believed in an American cryptocurrency company...
Investigation of '70 billion won' (February 25, SBS 8 News)
The bigger reason that Bitcoin will not function as a currency in the future is extreme price volatility.
The first cryptocurrency craze rose from $900 at the end of 2017 to $20,000 at the end of that year, then fell to $3,000 at the end of 2018, and then reached $60,000 again after a sluggish period of time. It fell to five thousand dollars.
In particular, over the past few days, it has surged close to $60,000 and then plummeted to $45,000.
There is no roller coaster like this.
There has never been a time when such highly volatile assets have been used as currency for exchange value.
After all, by analogy, bitcoin can be viewed as being traded like an antique traded on the black market.
The point here is the black market.
It is an investment that believes that the antiques traded in this market are genuine and buys them with the belief that someone will buy them at a higher or similar price later, but even if that is not the case, you cannot find and protest the person who sold you.
It is a structure in which investors have to take all risks themselves.
● Can Bitcoin be'digital gold'?
So, what's coming out more than the claim of'the currency of the future' is that "Bitcoin should be viewed as'digital gold' and invested."
Like real gold, it is said to be an investment target that can respond when inflation causes the dollar-like value to fall.
This is reflected in the price of gold and silver as a means of avoiding inflation.
The world's remaining amount of gold is about 190,000 tons, and it produces 4,300 tons per year. In terms of the proportion of free gold, the proportion of gold produced per year is 1~3% of the total, so it hardly affects gold prices Rather, they are sensitive to inflation.
If bitcoin becomes'digital gold' and investors perceive and invest that way, it should be similar to the direction of gold price.
However, the gold price is at its lowest level in the last eight months, but the bitcoin price has hit an all-time high and then fell.
Unlike in the first craze four years ago, the fact that the prices of other cryptocurrencies have not skyrocketed unlike bitcoin makes it less convincing to explain that bitcoin is considered as digital gold and invested.
Bitcoin is a situation where speculative transactions by individuals with wild impulses meet a situation in which supply is limited and the price of Bitcoin is sharply fluctuating.
Bitcoin's total mining volume is 21 million, but 88% of it has already been released to the market, and'limited-edition marketing' that it will end mining in 2040 is highlighting the scarcity.
And there are some who fueled the roaring bitcoin market, dominated by wild impulses.
Representatively, Tesla CEO Elon Musk.
As the market was skeptical of the'trading function' of Bitcoin's currency, Musk said he would be able to trade Tesla with Bitcoin, and continued his remarks encouraging Bitcoin investment.
Tesla has also invested a whopping $1.5 billion, or about 1.6 trillion won, in Bitcoin.
Since Tesla is investing, it may be misunderstood that other institutional investors may have invested a large amount of money, but the total amount of bitcoin purchases by institutional investors since September last year was $11 billion.
Considering the sum of the sums of all the investors of professional institutions investing in the financial market, you can see how much Tesla, the manufacturer, bought alone.
As a result, there is a strange phenomenon that Tesla stock price is linked to Bitcoin price and moves.
When Elon Musk surpassed $1 trillion in bitcoin market cap and became the 8th largest asset in the world, he took a step out of "it looks expensive," but still encourages others to "go to $100,000" Ki also makes claims.
There are many questions about whether bitcoin, which has a limited amount of mining and its expensive cost, will actually be used as a means of purchasing Tesla, but among more than 8,500 cryptocurrencies, only the coins mentioned by Elon Musk soared, and the rest are unable to lose Mac. So, it may be too early to see Musk's mouth as a'digital gold' in the context of investing in bitcoin.
● Repeated US Treasury Secretary's warning, will it end with a warning?
Of course, there are people who make a profit by succeeding in investing in Bitcoin.
Some people will continue to make profits through feral impulse.
By the way, it would be nice if prices continue to rise in the future, but most people will find it difficult to cope with a sharp drop of close to 20% per day.
As previously compared, there are people who make profits from goods traded in the black market, but they take the risk themselves, and claim that those traded with this characteristic are'future currency' and'digital gold' and should not give an illusion. I want to do it.
It should be noted that U.S. Treasury Secretary Yellen has already issued three warnings about Bitcoin and is sending a consistent message.
"It was used for money laundering."
"It is a highly speculative asset."
"I am very concerned about the potential losses that investors will suffer."
(U.S. Treasury Secretary Yellen)
How long will we only see the situation where Tesla stock price is linked to the sharp rise in bitcoin and a chain affecting the Nasdaq stock price? The reason why the first cryptocurrency craze ended 4 years ago is because each country started to regulate it, starting with the Central Bank of China. But this time, whether it will go over, the situation to come is not favorable to Bitcoin. With the message that blockchain technology is not a problem, but that cryptocurrency speculativeness is a problem, the central bank of China is taking the lead in issuing'digital currency', and the US Federal Reserve is also unlikely to speed up. In such a situation, the debate about'the nature of Bitcoin' is likely to spread further.
The real person of the movie'Big Short' and the founder of Scion Asset Management, who made billions of dollars by predicting the subprime mortgage crisis in the US in 2008 and betting on the collapse of the real estate market, recently used the ID'Cassandra'. Left an interesting post on Twitter. The price of the asset market such as stocks and real estate rose not because of the actual value, but because of the money that was released too much.However, it was predicted that tremendous inflation would come because there was no choice but to release more money as a stimulus from Corona 19, and in that situation, Bitcoin fell sharply. I expected to do it. I made an extreme analogy referring to inflation in the days of the Weimar Republic, and the part that explained why he wrote this was more eye-catching than what he said. Michael Burry wrote, "Before the collapse of the housing market in the past, I had clearly warned, but people didn't listen to them and later blamed them for why they didn't. So this time, I'm writing to keep a record that I warned." In February 2021, when the bitcoin price peaked again in February 2021, the comments made by experts on the phenomenon seem to be worth putting together, so I leave a post.