Why Bitcoin cannot become a currency (why does Bitcoin not depreciate)

08/05/2023 03:34 • Tech Ticker • 96 views

Why Bitcoin cannot become a currency Editor’s note: This article is from Orange Book (ID: chengpishu), original author: Michael J. Williams, reprinted by the Daily Planet with authorization

According to the data of the Bank for International Settlements, the global financial transaction volume in 2019 is about 9 trillion dollars; In the past 30 days, the value of Bitcoin has reached 3 trillion RMB, which has more than doubled compared to the same period last year, indicating that Bitcoin cannot become a currency However, there are several facts worth considering: 1. Due to the decentralized nature and consensus mechanism of blockchain, Bitcoin cannot be used as a medium of exchange, payment method, or pricing unit Bitcoin as a system does not have sufficient functionality to support any asset or value transfer in the network Bitcoin is not currency or money Bitcoin has a speculative nature and therefore cannot be used to purchase goods and services Bitcoin is not a viable investment tool. It can provide some basic functions and enable it to hedge against inflation risks. But if you want to consider them as an investment product, you must consider whether they constitute a security, as these securities may affect the way people use encryption technology. So for Bitcoin, this is not feasible Why does Bitcoin not depreciate? Let’s take a look at historical data first. From 2015 to 2020, the average price of BTC increased by nearly 1000 times (approximately $4000 at the end of 2018), an increase of over 360% in the past year; In the seven years since January 2019, BTC prices have decreased by over 50% (approximately $2000 at the end of 2017). So what will happen next Firstly, we need to know that there have been significant changes in the monetary policies and fiscal stimulus plans of major countries around the world from early 2009 to the first quarter of 2010. China has also experienced two large-scale banknote printing operations, with negative interest rates implemented in June 2017, resulting in a significant decline in the exchange rate of the renminbi against the yen. However, after the end of October, the situation of “Zero interest-rate policy” appeared again, which means that the domestic economic situation has not improved or slowed down at present, so the market’s attitude towards the central bank’s digital currency is relatively positive overall. After the Federal Reserve announced a 75 basis point interest rate hike in early February 2020, the US stock market plummeted by another 4%, and Bitcoin prices hit a new low. Since then, the entire market’s funds have been concentrated in this round of rebound. Since mid March 2021, the most valuable assets in the global financial market have been stocks such as gold and real estate. As people increasingly combine these hedging tools with investment portfolios, investors are flocking to this field to seek better risk management methods to mitigate the impact of economic uncertainty. On April 11, 2019, the market value of US treasury bond bonds broke through $20 trillion for the first time, and then soared more than 200% all the way. As of the time of publication, it had reached a historic high of 19 trillion yuan. Before April 12, 2019, the US Congress officially passed the Capital Market Basic Law, which clearly stated that:

1. Companies need to hold a large amount of cash in order to continue operating their business and obtain higher returns. If a listed company has sufficient cash reserves, they can use this income to purchase more bonds and securities while maintaining the company’s financial health.

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Why Bitcoin cannot become a currency (why does Bitcoin not depreciate)

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