Bitcoin is a magical virtual currency. It guides the wind vane of virtual currency. At the same time, it can be said that bitcoin will be the number one virtual currency in 2020. At one point, it went up to $60000 a piece. This has also brought technology giants to chase and increase their positions in bitcoin. So why is bitcoin so hot? The main reasons lie in the following aspects.

First, the scarcity of bitcoin. The total amount of bitcoin is only 21 million, which is also an original parameter set by its designers at the beginning. So at present, bitcoin is so crazy because it is a very scarce resource. The reason why bitcoin was so easy to mine in the early days was that there were a large number of bitcoins at that time, because its base was relatively large, with 21 million. So in the early stage, if we want to invest in bitcoin and build a mine to dig every day, the probability of digging bitcoin will be very high.

But the income at that time was not so high, so if we could put some bitcoin at that time, the profit would be very large until the appreciation. But with the continuous exploitation of bitcoin, more and more bitcoin has been mined. Then his total number will be reduced. After that, it will bring two effects. The first effect is that it is more scarce, which makes it more difficult to be dug out. If we use the metaphor of playing games, we can know. It's very low. Maybe before, for example, it took you 100 hours to dig out a bitcoin. Now it may take you 1000 hours to dig out a bitcoin.

Therefore, when this resource is scarce, its excavation rate will decrease. The second is that its value will increase, because more and more bitcoin is controlled by a large number of institutional and personal consortia. So the possibility of mining out is very low, so its value will be higher and higher. This is what we call the rarity of things. The second is the value preservation of bitcoin. We all know that gold is the king of value preservation. Besides gold, what else can be more valuable? First of all, this hedge must meet the following characteristics. First, it must be reliable. It must not be changeable, and it must have a certain degree of stability. Second, it needs to be widely recognized. Only when we all recognize this thing, can it have the value of preserving value.

Just like the dollar, you can spend it anywhere in the world, because everyone agrees. However, the currency issued by a certain country does not have the value preservation function, because it can only be circulated in this country, which is not widely recognized. Therefore, bitcoin, as a widely recognized virtual currency, has certain value preservation characteristics in this area. Especially since COVID-19 has spread around the world. The world's economy is in recession, so everyone will want to invest in something with better value preservation. It can be imagined that in addition to gold, bitcoin is the best and most stable virtual currency in terms of value preservation. So a large number of consortia and individuals invested in bitcoin, which led to the popularity of bitcoin in 2010.

Of course, although it has a certain degree of value preservation, but also faces a deficiency is that it has not been recognized by more countries in the field of circulation. Although its value preservation has been recognized to a certain extent, it has not been officially recognized. Therefore, bitcoin, including various virtual currencies, cannot be effectively circulated in many countries. Of course, I believe that in the near future, with the deepening of people's understanding of bitcoin and the strengthening of the recognition of bitcoin, bitcoin may become a kind of virtual currency that can be circulated on a global scale.

(2021-4-3)