Tulip foam is widely regarded as the first asset bubble in human history. Many people compare bitcoin to bitcoin today, which will burst sooner or later. But if you think about it, tulips are in unlimited supply. As long as the land is reclaimed, they can be supplied on a large scale, which is quite different from the limited supply of bitcoin.

The second is that bitcoin has no intrinsic value. It's true that bitcoin has no intrinsic value, but we can see that the dollar has no intrinsic value since it left the principal position. Its value lies in the US government's endorsement of the dollar, and the dollar becomes a credit currency, so the value of the dollar is credit.

Back to bitcoin itself, it has the unique characteristics of decentralization and scarcity. Some people in the market begin to worry that with the decline of the United States, the dollar has become waste paper, and the value of bitcoin is the support of belief as an alternative currency. Therefore, in essence, the value of the US dollar and bitcoin are the same, both of which are human's trust in it. The difference is that one is supported by the government and the other by its characteristics.

In my opinion, the future value of bitcoin depends on the relationship between supply and demand and the attitude of the government.

According to simple economic principles, the limited issue machine of bitcoin results in the limited supply of bitcoin. As long as more people in the market recognize the rising demand for bitcoin, the price will rise.

On the demand side, the United States has continuously printed money in recent years, which has shaken the market's confidence in it step by step. There are more and more voices against the hegemony of the US dollar, and bitcoin has become the subverter of the US dollar. Institutions entered bitcoin one after another. International trading giants visa and paypal accepted bitcoin as payment currency one after another. Then they went to "bull market Queen" sister wood and "Iron Man" Musk to invest in bitcoin, further strengthening the market's confidence and enthusiasm in investing in bitcoin.

On the supply side, bitcoin mining is based on the reward halving effect. After every 210000 blocks are generated, the reward will be halved. As the supply will be less and less in the future, the earth has dug up 90% of bitcoin by now, and the next halving is expected to be on May 8, 2024. In the past, the "half price increase effect" was generally applied. Whether it will be effective in the future remains to be seen.

The government's regulatory attitude also played a decisive role in the bitcoin. In 2013, China's notice on risk prevention of bitcoin was released, and the price of bitcoin fell by 75%. But in 2017, the impact of China's second regulation on the price of bitcoin was very different, with a drop of only 22%.

Why? Bitcoin is a global cryptocurrency, and the market is not only China.

Bitcoin is legal in all major economies in the world, including all European countries, the United States, Japan, South Korea, Australia, New Zealand, Mexico, Argentina, Brazil, India, Turkey, Hong Kong, Malaysia, the Philippines, Singapore, Thailand, South Africa

If we compare the legal status of bitcoin in 2014 with that in 2021, we will find that the expansion of green area (allowing the use of bitcoin) is positively related to the price of bitcoin. Instead of staring at the price of bitcoin every day, we should pay more attention to the regulatory policies of bitcoin in various countries. If the map becomes "green", what will the price of bitcoin be ？

Bitcoin is a new product of the information age. If we can't put down our prejudice in the face of new things, we may lose the opportunity of the times. The car has been our friend, the carriage has already entered the history. Will bitcoin become the internet currency in the future.

(2021-4-18)