Summary: Author:Weisha Zhu ——Answers to the concepts in the article "Invite Satoshi Nakamoto to Welcome the New World" Chapter 8 of the article "Invite Satoshi Nakamoto to Welcome the New World" says that Bitcoin stored value is the most suitable application of the Bitcoin system. Best-fit application refers to the most appropriate application of the technology. ...

Author:Weisha Zhu

——Answers to the concepts in the article "Invite Satoshi Nakamoto to Welcome the New World"

Chapter 8 of the article "Invite Satoshi Nakamoto to Welcome the New World" says that Bitcoin stored value is the most suitable application of the Bitcoin system. Best-fit application refers to the most appropriate application of the technology. Auburn Satoshi and others believed that it was Satoshi Nakamoto's original intention for the Bitcoin system to take the same platform route as Ethereum. In fact, as a platform, the technical solution designed by  Satoshi Nakamoto is not suitable. Therefore, the Bitcoin system will not become the most critical payment system in the world.

It should be pointed out that Bitcoin is the application result of the Bitcoin system, and the Bitcoin dollar standard is the largest application of Bitcoin. Note: Bitcoin and the Bitcoin system are related but not identical concepts.

Bitcoin is very fortunate as a commodity to have stored value. Few items have stored value. Stored value means that goods can be stored to preserve their value. We know that antiques can maintain their value, and cypherpunk only took nearly 30 years of hard work for a string of numbers to store their value. Does it take so long to make a payment system? Obviously not. Some people have tried and failed before Satoshi Nakamoto, such as Douglas's E-gold and so on. Satoshi Nakamoto spent nearly 10 years thinking about making a payment system that ordinary people could think of? That's what Nakamoto Fool did. Payment cannot be used to store value, nor can Satoshi Nakamoto's ideal of replacing fiat currency be realized.

It is a ground-breaking creation to make a string of numbers have stored value, and this creation itself is of great value. However, stored value doesn't feel like an application. Is this point of view correct? Putting paintings in the warehouse is not an application but only the value of the picture itself, that is, the stored value. Paintings displayed in museums not only have their value but also have watch value. That is to say, gold stored in the warehouse has only stored value, just like the value of the paintings in the warehouse. How to make good use of the stored value and make full use of the stored value? The Bitcoin dollar standard is like putting a painting in a museum to play the role of the stored value of Bitcoin. The value of this application is too great. According to the financial value of Fisher's formula, it is equal to the total wealth of humanity! In our definition, Bitcoin is equivalent to the M1 of the current financial system, which has a corresponding relationship with the society's total wealth but not the society's total wealth. The value of all applications in the entire blockchain is less than a fraction of the bitcoin dollar standard value. So I said in the previous article that Ethereum has picked sesame seeds and lost watermelon because the current Ethereum only represents the value of the payment platform, which may have an advantage in the short term. Still, it loses the opportunity to challenge Bitcoin in the long run.

Which commodity has the largest market in the world? Currency!

Which application system is the largest in the world? Currency system!

Which project is the largest in the world? Establish an asset currency financial system that replaces the fiat currency system.

It is what blockchain people dream of. The goal seems so close, yet so far away. It has been 14 years since the birth of Bitcoin. The proposal of the Bitcoin dollar standard plan is equivalent to Wei Dai's proposal of B money. There are no technical obstacles to the plan's realization, and the large-scale adoption depends on the time of market consensus.

A group of young people who started in the early 1980s are the same as today. Their coinage goals seemed so close but so far away. All ideas were developed in the late 1990s, and hardware technology matured later. The catalyst for the market was the financial turmoil that began in 2007, which finally made society widely realize that the fiat currency system is unreliable. Today's diehard fans of Bitcoin are people who don't trust the existing fiat currency system.

Distrust is due to the flaws of fiat currencies. In summary, it has two major flaws, depreciation and system complexity.

There are many reasons for the depreciation, including the arbitrary issuance mechanism of the central bank. But, unfortunately, few fiat currency issuance mechanisms outshine blockchain junk: algorithmic stablecoins, let alone Bitcoin.

For example, the inflation of Bitcoin is clear, its issuance principle stipulates it, and it has been specified for 132 years. So does Bitcoin's inflation need us guessing?

The inflation of fiat currency is not clear, and it is not clear how much to adjust under what circumstances. The uncertainty of fiat currency issuance and interest adjustment constitutes a massive regulatory power, which is a sickle that harvests the whole world. Judging when the sickle will fall and how hard it will fall has become a profession, a guessing profession, and an investment banking business. Under the condition of ensuring that there is no inside information, the result is that those who guess correctly win, and those who guess incorrectly need to run fast; retail investors are slow to respond because stragglers cannot beat the regular army, and many of them become leeks. The above is the current state of the financial market. In addition, to industry, they can't run away; they are old leeks that have no resistance. Who has the most to lose? Not yet an industrialist but an inexperienced financial speculator. Some of the lost money of ignorant speculators was part of the bubble's bursting, and some of it was earned by top speculators. The people who designed this set of fiat currency mechanisms are a group of brilliant people who are constantly iterating. Maintaining the fiat currency system from collapsing is also a miracle. They gain huge system arbitrage opportunities from it. Suppose the financial bubble cannot be burst through one collection and one release. In that case, the Fisher formula cannot correctly correspond to the total social value created by the industry, and it will really become a Ponzi scheme. Initially, the fiat currency system worked well, but then it got worse. It is similar to a Ponzi scheme. The financial turmoil that began in 2007 has actually sounded the death knell of legal currency. The 2022 Nobel Prize was awarded to three people, including Ben S Bernanke. The press was silent, and no one understood and knew the meaning behind it. A big bubble can collapse humans; in their operation, we relatively safely pass.

There is another character here, Henry Paulson. According to a report by The New York Times on September 25, 2008, in order to pass the rescue plan as soon as possible, Paulson even knelt on one knee in front of Pelosi, Speaker of the U.S. House of Representatives. Ask for support. His kneeling, moving to tears. He is a financier and an entrepreneur and knows the seriousness of the problem. It is not too much to say that he, Bernanke, and others have saved the United States and the world. Without their decisive efforts, the market may go back more than 10 years, and countless good people will lose their fortunes.

But under their patronage, the executives of financial institutions that have made mistakes have received staggering bonuses. So ultimately, the mistakes are paid for by the victims. It is the advantage of interest groups; they are representatives of interest groups, know everything, are well aware of the flaws and ways of the fiat currency system, expect them to be fair, and don't even think about it. Are they heroes or liars? They are like Li Hongzhang of the Qing Dynasty in China, a "papermaker for a broken ship" who only treats the symptoms but not the root cause.

The ship of fiat currency has been broken, the momentum has declined, the central bank cannot deal with its debt problems, and there is no other way but inflation.

Second, the fiat financial system is so complex that finance has become a sector independent of industry. The U.S. Congress has a Financial Services Committee, and this name is in line with the original intention of fiat currency issuance in the early years. Now finance has gone far beyond the meaning of service. We have seen that China has just established the Financial Stability Committee; the name represents the meaning of today's finance. Not the service is the power. They also know everything, knowing that financial instability is a big probability event. They have to learn from their teacher Paulson to do the same thing, transfer the crisis, and stabilize the economy by manipulating fiat currency but Protecting interest groups.

Finance has become a monster that exploits the industry. After watching a WeChat video by Lu Linyuan, the first and tenth of China's top ten listed companies are wine, and the middle eight are financial companies. It is more exaggerated than the information quoted in the article I wrote to invite Satoshi Nakamoto. Agriculture, industry, and service industry are the three major industries. Finance is only a part of the service industry, occupying 8 of the top ten. We know that with the huge profits of wine, the cost of materials is only about 10%. Finance and this kind of profiteering industry can be compared. Satoshi Nakamoto said: Banks have very little bank principal, but they use bubbles to release money. Labor earns his money, and every dollar is dripping with sweat. Banks use their money to generate money, They are the creators of bubbles and problems, but they are not the ones who pay the bills. Call it too big to fail, absurd to the extreme, this is the exclusive benefit of interest groups, and this is the advantage that fiat currency brings them. The fiat currency system is unfair to the working people.

They know the bubble is about to burst, so they must find a way to sustain it. It is the meaning of financial stability. The Financial Stability committee and the central bank can check and balance each other to some extent and play the role of checks and balances between the U.S. Congress and the government. The key is opacity, which is far worse than the blockchain mechanism. Printing money is inflation. They cause trouble, but they want the public to pay.

Where does the money go? Most destruction is in bubbles, especially when wealth is undervalued. Banks and other financial and investment institutions with strong backgrounds are rich and powerful and have acquired bloody and undervalued wealth. Big capital, financial speculators, and insiders are always winners. It is the reason why every economic adjustment in China leaves state-owned enterprises. This logic will be repeated in real estate adjustments this time. This adjustment mechanism of one release and one collection of fiat currency is not the exploitation of working people by capitalists as described by Marx's surplus value theory but the exploitation of working people by power, in Musk's words.

The detonation of the blockchain algorithm stable currency Luna proves the importance of credit endorsement. However, regarding the issuance mechanism, fiat currency is not as good as an algorithmic stable currency. Fiat currency has the power to endorse, but the power is arbitrary, so our currency ruler, the dollar scale, is constantly changing. Only 3% is left of the purchasing power in 100 years.

The bitcoin dollar system must ensure that the currency does not depreciate, the system is transparent, the management is as tiny as possible, and it is fair to operate in the community. It is also necessary to solve the old historical debt of the existing fiat currency system and adopt a redemption policy for interest groups.

Bitcoin is used as the valued endorsement, and the stable currency is used as the value ruler to realize the Bitcoin dollar standard. It is the solution I propose in Chapter 12.

The Bitcoin system is stable enough, and stablecoins have undergone extensive experiments. Therefore, it only needs a transparent centralized platform, which has no technical difficulty and will be launched in 2023.

Why is the Bitcoin dollar standard the largest application in the world? In Chapter 13, the natural growth curve of Bitcoin, we depicted the market value of Bitcoin under the Bitcoin dollar standard for 132 years. In the 5th cycle, the average market capitalization is 4 trillion. We are currently in the 4th cycle of Bitcoin and have less than two years to enter the 5th cycle. In a specific year of the 5th cycle, it will surpass all the largest companies in the Nasdaq market value. The beginning of the seventh cycle is 2036. The average market value of Bitcoin reaches 24 trillion. Gold is calculated at the current 11 trillion. If an annual growth rate of 4%, it can reach 18 trillion in 2036. If it is fast, Bitcoin will surpass gold in 2036. If it is slow, it will exceed the market value of gold in 2037 and become the world's largest application. The above assumptions are valid as long as it is the Bitcoin dollar standard.

As the second half around, the Bitcoin dollar standard is not mainly a technical issue but an educational market issue. So let every exploited working person understand the truth, exercise their voting rights, and elect a government representing their interests. It makes America great again slogan more louder. None of Mr. Trump's approaches is more attractive than this one. Who has such an appeal to the public to attract widespread attention from society? Satoshi Nakamoto, of course! It is one of the reasons to find Satoshi Nakamoto. That is to say, in the preface of the article "Invite Satoshi Nakamoto to Welcome the New World," the days of Satoshi Nakamoto's leisurely leisure are over, and the process of realizing the ideal of cypherpunk has begun. The days of hard struggle will be started.

Chapter 12 directly states the conclusion of the Bitcoin dollar standard, which is not easy for most people to understand. Therefore, the following article will explain the difference between the Bitcoin dollar standard and the fiat currency system.