On January 3, 2009, Bitcoin founder Satoshi Nakamoto personally created the first block-the Bitcoin Genesis Block (Genesis Block), and obtained the first 50 bits automatically generated by the system The reward of coins, the first Bitcoin came out.
From the perspective of Bitcoin’s output mechanism, Bitcoin is calculated by the mining machine to calculate the “mathematical problem” on the block in the Bitcoin network. Whoever solves the block first can obtain the accounting of this block. Right, and get the bitcoin rewards in the block, miners will be born.
With the advent of ASIC mining machines in 2013, mining has gradually evolved into an industry. Although the history of this emerging industry is less than ten years old, every industry is a river and lake, and where there are rivers and lakes, there are swords and swords. In just a few years, the miners have gone through two violent cycles from heaven to earth. The rivers and lakes have been blood-washed, and they have stepped on countless pits. Finally, they have waited for another bull market.
As of March 12, the price of Bitcoin has risen above $58,000 per coin, approaching the record high set last month. From the low point on March 12, 2020 to today, Bitcoin has increased by 13 times in one year. The law of the last bull market, insiders believe, this is far from the culmination.
Along with the Bitcoin bull market, after two or three years of silence, the mining industry has once again entered the eyes of investors and the public, followed by the skyrocketing and looting of mining machines. Take the latest flagship model s19 miner released by Bitmain in February 2020 as an example. It has risen from the original 15,000 yuan/unit to 60,000 yuan/unit. As the latest model, it has the smallest increase. Even so, it is still hard to find a single opportunity. According to the 21st Century Business Herald reporter, the futures of major manufacturers within six months have been sold out, and many futures orders have been scheduled for February next year.
Insiders say that virtual currency mining may have passed the era of extreme wealth, but it is still a good investment asset. Perhaps to confirm this view, large institutions and large companies have recently entered the market. Although there are still doubts from the outside world, it is undeniable that virtual currency mining is rapidly moving towards scale, and there are myths of creating wealth from time to time.
Miner iteration: mining is no longer a game for ordinary people
A miner explained mining to a reporter from 21st Century Business Herald, because blocks are mined every 10 minutes on average. Mining is a “Hunger Game” held every ten minutes. Miners all over the world will participate, and the game’s prizes It’s Bitcoin.
The so-called mining algorithm is actually a method of guessing numbers. The method is fixed and simple, so there is no room for improvement. There is only one way to win the game, which is to find the hardware that can execute the algorithm the most times per unit of time. In addition, 1+1=2, whoever has the most such hardware is the most likely to win the game. So the entire history of Bitcoin mining is actually the iteration history of mining hardware.
It is said that the era when everyone used ordinary computer CPUs to mine at home was called the creation era. By 2010, someone discovered that AMD’s GPU chips had a specific computing component that could accelerate the key steps of guessing numbers. “GPU miners” assembled by GPUs quickly eliminated ordinary computer miners.
By the end of 2011, FPGA mining machines appeared, the efficiency was greatly improved, and the first mine Eligius appeared. But the mining farms were still in their infancy, and miners still mainly refer to personal computers that mine silently all over the world. Up to now, the mainstream ASIC chip machine is the fourth-generation mining machine. Compared with FPGA, ASIC chip sacrifices flexibility and is built to guess the number of mining, so the efficiency has once again made a qualitative leap.
Some miners have made a quantitative comparison of several types of mining machines. If the mining speed of the CPU is 1, the speed of the GPU is 10. Although the speed of the FPGA mining machine is only 8, it consumes 40 times less power than the GPU, while the ASIC mining The mine speed is 2000, and the power consumption is equivalent to that of the GPU. Therefore, as soon as the ASIC chip came out, the other three types of mining machines were quickly driven out of the market.
Judging from the history of mining development, by around 2014, the Bitcoin mining field has no living space for individual miners except mines and mining pools, and the concentration of the top ten mining pools has been basically determined. It can be said that a fairly high degree of centralization has been achieved while ensuring the security of the Bitcoin network. Many well-known industry star companies and business owners, such as Ant Mining Pool, Yuchi, Lebit, Guochi and other groups, as well as the people behind Wu Jihan, Jiang Zhuoer, Colorful Shenyu, etc., appeared during this period.
Jiang Zhuoer, the founder of Lebit Mining Pool, recalled to a reporter from 21st Century Business Herald that at the end of 2013, when he was a computer professional, he encountered a problem of cross-border payment collection when he was in the game business. He learned about Bitcoin when he was looking for a solution: “The end of 2013 was the top of the Bitcoin bull market. I judged that there was a bubble and decided not to participate in the transaction in a short period of time. However, there was a certain profit from mining at that time, so I assembled two graphics card mining machines by myself. Mining at home, slowly accumulating the number of mining machines and Bitcoin, and gradually expanding the business.”
Jiang Zhuoer pointed out that there is a cost to purchase a mining machine. For example, the current price of the S19 mining machine is 60,000 yuan, but once the mining machine is purchased, it is equivalent to the opportunity to buy bitcoin at a discount in the next 5-10 years. For example, if you use S19 mining machine to mine, you can mine 200 yuan worth of bitcoins by paying 26 yuan a day for electricity. The static payback period of most mining machines is 200-300 days. Compared with hoarding or speculating coins, mining is a lower risk investment method for many people. This has also led to the hot market for mining machines.
Jiang Zhuoer explained that although Bitcoin has experienced a huge market that rose 100 times from 1,300 yuan to 130,000 yuan in the last cycle, few people actually made 100 times. For most people, the biggest difficulty in buying coins is that they can’t store them. No one can predict where and when the peak of the market will come. Once they fail to escape the top, the bear market Bitcoin will basically fall by 80-90%. , So most people can’t help but sell if it rises by 30%~50%. There are very few people who can hold Bitcoin if it rises by three to five times. Those who can hold bitcoin that rises by 100 times are nothing in a thousand, and most people even pay. Due to the use of high leverage to speculate coins, losses will occur in cyclical fluctuations.
“But mining does not have this problem. In the bull market, the mining machine is a goose that lays golden eggs. Most people will not sell a goose that lays golden eggs. Therefore, most miners can dig all the time. The entire bull market, unlike buying Bitcoin, can’t help but sell if it rises several times. Buying Bitcoin is an inhumane process, while mining is a humane process. And because of the long duration of mining, For example, the S9 mining machine in the last bull market in 2016 has been digging for 5 years and is still digging. Each has a net income of 20 yuan per day. Therefore, during the entire life cycle of a mining machine, there will be more than one round. Bull market, so it can be said that the miners who are actually mining in history are all profitable.” Jiang Zhuoer said.
But Jiang Zhuoer bluntly said that the current investment threshold for mining is very high and will get higher and higher. In the early days, there were family miners. One or two mining machines could mine at home. However, with the rapid development of the entire industry on a large scale, the mining business model has undergone tremendous changes. In terms of electricity costs alone, because Xinjiang electricity is much cheaper than household electricity, the same mining machine requires 5 yuan of electricity to dig 10 yuan worth of bitcoins in Xinjiang mines, and 10 yuan of bitcoins for mining at home. Just pay 10 yuan for electricity, which leaves family miners almost no living space.
According to a reporter from 21st Century Business Herald, in the bull market in 2018, the previous generation of the magic machine Antminer S9, the price exceeded 10,000. At that time, if you want to dig bitcoin, at least hundreds of S9s are running day and night. Now The difficulty of mining will only be greater.
“The current mainstream is to do large-scale mines with tens of thousands or even hundreds of millions of hours. There are tens of thousands of mining machines in the mines. Of course, there is usually not only one miner in a large-scale mine, but many of them are like mine. In this way, miners who buy mining machines on a large scale will provide custodial services. But this is still very unfriendly to retail investors. If you only have a few or dozens of mining machines, and you want to put them in the mine, the mine There is a high probability that you will not be ignored. So some platforms will provide hosting services, but this kind of retail player is not the mainstream of the mining industry. A large miner with 100,000 mining machines can support 10,000 small miners with 10 mining machines. Most of the mining machines are held by big miners. And since Bitcoin was sought after by the US capital market, Ninetowns and many other US listed companies have purchased bitcoin mining machines in the market at no cost, making the mining machines further large funds. , Controlled by large institutions, it is difficult for retail investors to participate in mining anymore.” Jiang Zhuoer said.
Jiang Zhuoer told reporters that Bitcoin’s output halving every four years will cause huge fluctuations in Bitcoin’s supply and demand, so the Bitcoin market will also show a relatively stable and expected cyclical market. According to the previous round of bull market experience, there were more than two 40% drops in the rising stage from 10,000 US dollars to 50,000 US dollars. This time there were only 2 times, and the decline was about 20%, which is relative to the last bull market. It’s very “stable”. The reason is that mainstream large institutions and large funds in the United States have begun to enter the market. For example, Tesla bought 1.5 billion U.S. dollars in Bitcoin, Meitu’s Cai Wensheng also bought 40 million U.S. dollars in Bitcoin, and MicroStrategy bought a total of 40 million dollars. For billions of dollars of Bitcoin, the market giant Grayscale Fund has bought a total of 650,000 Bitcoins worth 38 billion U.S. dollars, and tens of billions of dollars of ETH Ethereum, BCH Bitcoin Cash and other virtual currencies.
These are only open positions, and there may be many who have not open positions under the water. They allocate Bitcoin according to commodities and medium- and long-term assets. Although these institutions only put out a small position to allocate bitcoin, because of the huge volume, it is far from the previous player’s capital volume in the currency circle. Even if players in the currency circle want to speculate, but large institutions enter the market and hold them for a long time, making currency price fluctuations smaller. This will cause the market to further clear out the small players who chase the rise and fall, and Bitcoin and mining are both decentralized.
In Jiang Zhuoer’s view, the future of mining is a kind of large-scale industrial production, just like traditional coal mines. Although there will be small coal mines in the short term, the future will definitely be the participation of such large-scale integrated players.
Mine business experience: grab beach resources
In an interview with a reporter from 21st Century Business Herald, Bit Deer COO Ye Jiejie said that China is still the center of the Bitcoin mining industry. Last year, more than 50% of the global 9.6 GW mining power was located in China, and the second largest U.S. accounted for about 14 %.
In the competition for the right to speak in Bitcoin computing power, China takes the lead thanks to the rapid industrialization of the industry, and the rapid development of mining farms is indispensable. According to the 21st Century Business Herald reporter, there are currently no less than 100 domestic mines.
Yang Xiao, the co-founder of Panda Mining Machine, a leading graphics card mining machine company, said in an interview with a reporter from 21st Century Business Herald that as one of the earliest companies in China that operated mines as a company and deployed mines in Sichuan and Inner Mongolia earlier , Panda Mining Machine currently has 8 online mines and 1 mine under construction.
Yang Xiao pointed out that the mining farm can be understood as the infrastructure construction of the virtual currency mining industry. To put it simply, the mine is a native version of IDC (Internet Data Center, IDC for short). The entire model is similar to IDC, but the construction standard is lower than IDC.
The business model of the mine itself is relatively simple. One is its own mining, and the owner of the mine will also purchase equipment for mining; the other is to provide users with custodial services, and the profit model is to earn electricity tariffs. Because the income comes from the difference in electricity tariffs and is basically not affected by the currency price, unless it encounters an event similar to last year’s 312 (March 12, 2020, Bitcoin plummeted from $8,000 to $3,800 in just 20 hours, which is called by the currency circle The extreme market conditions during the 312 incident may cause some mining machines to be shut down. If there are still the latest machines in the mine, it will be able to resist the risk of the currency price plummeting. If you have low-priced power resources, old machines will not shut down, and will basically not affect the operation of the mine. Therefore, in addition to natural factors and policy influences that are irresistible, the overall profit model of general mines is relatively stable. Under normal circumstances, the return period is one and a half to two years.
According to Yang Xiao, mines are generally calculated according to the standard of electricity consumption per hour. The initial construction cost of the mine is 5-10 million yuan per 10,000 kWh. The large interval span is mainly affected by the conditions of the mine itself. , Such as the need for high-voltage and weak-current parts to be built. According to this calculation standard, if it is a large mine with hundreds of thousands of kilowatt-hours, the investment is also in the billions.
But for the technical difficulty of mine construction and operation, Yang Xiao pointed out that the technical barriers are not strong, and the difficulty is how to select and evaluate the site, and how to ensure stable power supply and sustainable operation in the later period.
According to the reporter of the 21st Century Business Herald, the income from the mining farm = the bitcoin produced × the price of the coin-the cost of the mining machine-the electricity fee-the maintenance fee and the labor cost-the depreciation fee of the mine. Although the mining machine is expensive, it is more expensive for large mining farms. In other words, mining machines are not the most important expense, and the biggest cost of mining is electricity. If you lease your own mines to others for mining, the revenue of the mines = lease fees-electricity costs-construction costs and labor costs. Therefore, the choice of electricity tariff depression is an important determinant of the income of the mine.
Yang Xiao said that because the mines are to be built in low electricity tariffs, in Sichuan, for example, Sichuan usually uses hydropower mines, which are close to hydropower stations. The risk of disasters such as mudslides in summer is high during the wet season. Therefore, the ability to evaluate and select resource points is very important. “High-quality resource points are scarce resources for mines. Although the electricity bills are relatively clear, mainly concentrated in the northwest and southwest regions, it takes a lot of effort to find the point that is really suitable for building a mine. Our team has always been the last one. Elimination system, a dedicated mine operation team searches for suitable resource points worldwide throughout the year. After evaluation, they will be taken down and matched to the back-end electricity demand. If there is an increase in demand, new points will be set If there is surplus power, it will be eliminated at the last place, new points will be activated, and the mine will be updated and iterated continuously.” He pointed out.
For mines, the current domestic policy is still unclear. Whether this is an innovative product or an outdated production capacity is also controversial. On February 25, the Inner Mongolia Development and Reform Commission’s official website stated that in order to speed up the elimination of backward and excess production capacity, it plans to comprehensively clean up and shut down virtual currency mining projects, and all exit before the end of April 2021. After the introduction of this policy, it has aroused considerable discussion in the currency circle, and it will also have a certain impact on the small and medium-sized mines built in Inner Mongolia.
But as far as the head mines are concerned, they are well prepared for changes in local policies, and they have gradually moved mines away from Inner Mongolia in recent years. In the eyes of many miners, the policy does not kill mines in one shot, but there are differences. Xinjiang and Sichuan are now becoming clearer about mining. Take Sichuan as an example. Last year, a demonstration zone for hydropower consumption was established to encourage high-power industries to absorb excess hydropower during the wet season. This also gives mines and miners more confidence.
Yang Xiao pointed out that from the perspective of the operation of the mine, its operation is also developing towards scale, specialization and service. From the earliest self-mining to attracting customers to put the mining machine in their own mine, the scale is continuously expanding. . In recent years, it has gradually started to cooperate with new external funds, which has accelerated the expansion of scale. At present, the ratio of self-owned funds and external funds is already 3:7, and the proportion of external funds may further increase in the future.
In addition, mining farms are also considering globalization and transfer. According to the 21st Century Business Herald reporter, Central Asia and North America are currently more promising regions for mining investors.
Ye Jiejie pointed out that the current goal of carbon neutrality and the control regulations of some local governments have little impact on the industry’s prospects, but it will encourage more mining equipment to be transferred to Sichuan and Yunnan, and to a certain extent accelerate the transfer of Chinese mining to sea. the trend of.
He pointed out that despite the huge energy consumption of Bitcoin mining, the current power system still has a lot of room for improvement in the rational use of energy. Bitcoin mining has only two requirements, electricity and internet. Basically not restricted by time and location, it can make reasonable use of the electricity that has been wasted to provide certain jobs and taxes for some backward areas. The mining industry is not saturated at present. With the increase in the market value of Bitcoin, the size of the mining industry that can be accommodated has also increased significantly. However, it is more difficult for new companies or investors to enter at present, mainly due to the serious shortage of mining machines in the market, and it is difficult to find a machine.
Mining Machine Manufacturers: The hidden cash flow worries under the skyrocketing rise and fall
At the end of February, a reporter from the 21st Century Business Herald visited Shenzhen Huaqiangbei SEG Electronics Plaza. This 2017-2018 world-renowned mining machine market once again ushered in a bull market three years later, but it was no longer busy.
The mining machine cards are still in several stores, but the store is empty. There are also two or three miner merchants whose decoration is more like a tea room, except that they don’t see sales staff. A salesperson of a mining machine dealer that is open for business said that there are currently about six or seven distribution mining machines in the entire mall, of which two or three are operating ipfs, and the others are operating bitcoin and ethereum mining machines. Since the second half of last year, everyone’s business has been obvious. However, there are very few offline buyers who come to shopping malls to shop for goods, and most of them place orders on WeChat or online.
Although offline shopping is hard to find, the market is very hot, but mining machine manufacturers have feedback that the spot is hard to find.
Yang Xiao told reporters that the current virtual currency mining is mainly two currencies, Bitcoin and Ethereum. Bitcoin mining machines mainly use ASIC chips for mining, while Ethereum mainly uses graphics cards for mining. Therefore, the hardware track of the mining machine is relatively simple, very similar to the traditional manufacturing industry, but the pricing model is different from other industries.
“The nature of the mining machine is not a consumer product, but an investment product. Therefore, the comprehensive pricing and the user’s purchase expectations may be different. We will reverse the pricing based on the return cycle of the mining machine, and the Bitcoin mining opportunity will return the machine. This week is controlled from 10 months to 1 year. The payback cycle of Ethereum mining machines will be relatively short, generally 4-6 months. Because the currency price has increased sharply, the net income of miners’ mining must be controlled. This week’s period is relatively stable, and the price of mining machines will also increase several times. And this part of the premium dividend is mainly obtained by component manufacturers, mining machine manufacturers and distributors.” Yang Xiao said.
However, the violent fluctuations in currency prices have also brought unpredictable pressure on cash flow to mining machine manufacturers.
Yang Xiao pointed out that whether it is a listed or unlisted mining machine manufacturer, cash flow instability is widespread in the industry. In the current extremely good situation, corporate cash flow must be very healthy, but because of the lag in the market and cycle, no matter whether manufacturers place orders with TSMC, or buy particles like us and NVIDIA and AMD (that is, video memory particles, it is the physical memory of video memory). Storage component unit), it takes 2-3 months to prepare materials, and the production cycle is at least 4 months. If there is a decline in the market during this cycle, the funds have been used to prepare materials, and the machine is slow to sell, the cash flow will be reversed extremely quickly.
As the only listed company among mining machine manufacturers, Canaan Technology’s third quarter 2020 financial report revealed that its revenue was 163 million yuan, a year-on-year decrease of 75.7%. The net loss attributable to Canaan Technology’s shareholders was 84.8 million yuan. In the same period of 2019, the net profit was 94.6 million yuan. The impact of the bear market on manufacturers can be seen. How to resist cyclical fluctuations and enhance the ability to resist risks is a common problem faced by this industry.
In this regard, Yang Xiao said that there are two main responses. First, in the comprehensive business decision-making, the sales plan and the production plan need to be formulated reasonably to avoid huge fluctuations in the sales volume of long-term customers under extreme market conditions, and to minimize the fluctuations through the adjustment of the plan.
The second is to make good use of financial derivatives. In the past two years, financial derivatives in the virtual currency industry have become more and more complete. For example, borrowing and hedging through options have provided more investment protection for mining machinery and mining investment behavior.
Even if there are cyclical fluctuations in the industry, the benefits of this round of mining machine manufacturers and mining machines are already clear.
Jiang Zhuoer believes that this year’s high probability is the year when the profitability of mining machines exceeds the increase of Bitcoin. Due to the shortage of chips, the increase in Bitcoin mining power from 2020 to 2021 is very small. If the power remains the same, the number of coins that a mining machine digs per day is fixed. The last round of increase was the simultaneous increase of currency price and computing power, so the daily output of a mining machine is relatively stable. However, this round of computing power is not as fast as the price of coins, which leads to a faster increase in the value of bitcoins that can be mined per TiB of computing power. This is also the reason for the sharp increase in the price of this round of mining machines.
For example, the latest s19 mining machine has the smallest increase, and the price has also risen from 15,000 to about 60,000 now, a four-fold increase. If it is an old mining machine with high power consumption, because its electricity bill is relatively high, assuming that you have to pay 8 yuan for electricity to mine 10 yuan, only 2 yuan will be output, but the currency price has doubled five times, and the computing power is not much. Rising, it means that 8 yuan of electricity costs can mine 50 yuan of Bitcoin, 42 yuan is output, and the output has doubled by 20 times. This also led to a greater increase in old mining machines.
Cloud computing power: admission ticket for ordinary people to mine?
As the value of the currency rises, more and more outsiders want to get a share of the mining pie. But with the increasingly higher threshold of mining, ordinary investors can only sigh.
As a result, in recent years, a mining product called “cloud computing power” has emerged and quickly promoted.
According to the 21st Century Business Herald reporter, the so-called “cloud computing power” means that users purchase cloud computing power contracts through the platform, lease computing power for mining, and obtain income at regular intervals. Its core advantage is to simplify the process and lower the barriers to entry. Users do not need to purchase expensive mining machines, select mines, and do not need to perform 24-hour operation and maintenance by themselves. After the contract ends, there is no need to deal with machines, venues, etc., and withdrawal is more flexible.
According to statistics, there are currently more than 50 global cloud computing platforms, including Huobi Mining Pool, Bit Deer, and Hash Power. According to the recent currency price conversion, the higher rate of return can reach 100%.
Insiders say that cloud computing power can be seen as the securitization of mining computing power, but the emergence of this new product undeniably also implies risks.
Bitfawn’s COO Ye Jiejie told the 21st Century Business Herald that cloud computing power has indeed significantly lowered the threshold for ordinary people to enter the Bitcoin mining industry. The main sources of risk are the fluctuation of Bitcoin price and the reliability of service providers. But in his opinion, there are also risk control methods. One is that ordinary users can control the risk of price fluctuations by selling them after digging up bitcoin, and the other is to investigate reliable service providers. In terms of the reliability of computing power service providers, it is necessary to consider the comprehensive analysis of the platform’s mine scale strength, mining authenticity, and business continuity.
Regarding cloud computing power, Jiang Zhuoer believes that it is more complicated and there are certain risks. The cloud computing power model looks a lot like financial management, and there are some chaos, it is difficult to achieve compliance. Assuming that the cloud computing platform operates in good faith, and it does buy a mining machine to mine, there is a high probability that it will be fine in a bull market, but when a bear market comes, investors may not be willing to bear the losses caused by huge fluctuations. And because the cloud computing power model looks like financial management, if a large number of loss-making retail investors report, they may face economic charges. The other is dishonest management. The platform claims to sell computing power and does not actually buy mining machines, because it is very troublesome to buy mining machines, and some platforms may be Ponzi schemes. Therefore, if investors want to choose cloud computing products, they must recognize the risks and invest carefully.
Financial derivatives: hedging or gambling
In addition to cloud computing power, the emergence of financial derivatives in the currency circle is also unclear whether it is an angel or a devil.
In January 2020, the Chicago Mercantile Exchange (CME) announced that it had obtained the necessary regulatory approvals and launched its new Bitcoin (BTC) futures options, and Bitcoin futures began to land on mainstream exchanges. In addition, leverage, contracts, ETFs and other financial derivatives are also giving virtual currencies more financial attributes.
The application of financial derivatives is also a common method used by miners to combat risks. Jiang Zhuoer pointed out for example, “If you have 100,000 yuan, you can buy one of the best mining machines, or two medium-sized mining machines. My choice is the third one. Buy one of the best mining machines. The mining machine takes the mortgage loan and buys the best mining machine. Although banks and other financial institutions do not recognize Bitcoin and mining machines, there are some platforms in the currency circle that are happy to provide such mortgage lending services, and the platforms also have comparisons. Reasonable risk control, the loan cycle is 3-6 months, and the interest rate varies from 8% to 15% annually based on qualifications.”
This level of interest is not low, but mining benefits in the bull market are huge. For example, in November 2020, I borrowed to buy a mining machine, and the interest cost of the fund is 3%-5% in the current 4 months, in exchange for the price increase of the mining machine 4 -6 times the income, which is not even counting the mining income during the period, which is quite cost-effective.
But it is undeniable that the rapid development of financial derivatives has also caused many investors to pay heavy tuition fees.
Yang Xiao pointed out that when dealing with financial derivatives, the core is to understand exactly what the mechanism behind each tool is, and then to make accurate judgments on the market, complete the use of good tools and implement strategies, and ultimately ensure that you have a more sustainable one. Cash flow. At the beginning of the birth of traditional financial derivatives, it was more to hedge risks, but speculation always existed, and eventually formed a game between risk hedgers and speculators.
Yang Xiao further stated that there are currently some relatively immature forms of financial derivatives in the currency circle. Taking futures as an example, it is normal that the spot affects the futures price, but in the currency circle, an inversion has formed, and the futures has adversely affected the price of the spot. There are two reasons for this. One is that the leverage is too large, and the other is that the threshold for obtaining leverage is too low, which leads to extremely exaggerated fighting behavior in the currency circle. It is normal to complete both long and short bursts in one day.
“I think the track of financial extension products needs to continue to develop. It cannot be choked by the various speculative incidents that currently exist. Especially for some large institutions, it is necessary to hedge and protect enterprises through derivatives, but for small and medium-sized investments. Investors and speculators need to be aware of the huge risks they exist before entering this track. Try to avoid blind investment. Although virtual currency is an emerging field, it also needs planning and supervision and investor education in the future.” Yang Xiao said .
Unknown experiment ending: faith and reason
In the eyes of many people, Bitcoin is an important socio-economic experiment in human history so far. Because of the mechanism of Bitcoin, it is difficult for any party to control her. Especially as the total market value of Bitcoin continues to pile up, it will become more and more difficult for the total market to be controlled. Among them, the multi-dimensional economic game is also increasing. More and more.
In Yang Xiao’s view, what exactly will this economic experiment develop into? Will it continue to develop positively, or will it encounter a huge black swan at a certain node in the future to form a systemic crash. No one knows the final answer. It is precisely the charm of Bitcoin itself.
When a reporter from 21st Century Business Herald asked, as a participant, how would you deal with the worst possible situation in the future. Yang Xiao smiled and said, to be honest, I think it may be difficult for early entrants like us to give a particularly good explanation on this answer. For Bitcoin, our group of people believe in too much. Although rationally there may be expectations of various situations that may occur in the future, from the perceptual choice, the belief in it prevents you from doing anything that is destructive in the future. In consideration of influence, many people in this industry call each other believers. We will cherish the coins in our hands very much and will not be willing to sell them, because we feel that selling any coin is a very big loss to our future.
As Yang Xiao said, this experiment is difficult to predict its final outcome. But it is undeniable that in this era where everything can be rolled up, virtual currency mining has created countless wealth-making miracles, and there are also waves of speculators losing their money. Whether to enter the game or not, before the risks, may depend on the choice and whether to believe.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.