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Q&A Series on Basic Concepts of Bitcoin (Part 4)

Weisha Zhu

Summary: Author: Weisha Zhu ——And answers on the concepts in the article "Invite Satoshi Nakamoto to Welcome the New World" 22. Bitcoin is not an air coin 23. Bitcoin through an air phase 24. Bitcoin is not a virtual currency 25. Bitcoin is an asset currency 26. Bitcoin is not a credit currency 27. The difference ...

Author: Weisha Zhu

——And answers on the concepts in the article "Invite Satoshi Nakamoto to Welcome the New World"

22. Bitcoin is not an air coin

23. Bitcoin through an air phase

24. Bitcoin is not a virtual currency

25. Bitcoin is an asset currency

26. Bitcoin is not a credit currency

27. The difference between asset currency, credit currency, and air currency

28. Bitcoin is not an equity currency

29. Definition of three primary functions of money

30. Bitcoin and stablecoins are both asset currencies, but there are differences

31. Bitcoin should back stablecoins

32. Bitcoin is a token

33. Historical evolution of currency forms

34. Bitcoin is a digital currency, not a digital fiat currency

35. Bitcoin is the digital currency with the lowest blockchain risk

36. Bitcoin has a monopoly position among similar digital currencies in the blockchain

37. Digital gold undervalues Bitcoin

38. Bitcoin improves on the shortcomings of gold

39. Bitcoin is a cross-sovereign currency

40. Bitcoin standard is the king status that Bitcoin should have

written in the back

    

These concepts are introduced and discussed throughout the article but are scattered across different chapters. This section summarizes the characteristics of Bitcoin to make the concept clearer. These concepts will be continuously added.

 

22. Bitcoin is not an air coin

The value of Bitcoin is converted from the value of electricity and equipment. It is precisely the same as the process of producing products in enterprises. Bitcoin, like gold, is a commodity-represented asset. However, Bitcoin is a string of numbers, not a physical asset like gold. It is where Bitcoin is accused of being air. Our deposits in the bank are also numbers, not physical assets. Don't bank deposit figures represent assets?

 

23. Bitcoin through an air phase

Bitcoin is in the stage of no transaction, from 2009 to May 22, 2010, before the first transaction; it is an air stage, and although there is a cost, there is no price. Therefore, Bitcoin obeys Mises' law of price regression.

 

24. Bitcoin is not a virtual currency

The reference to virtual currency is unreal and virtual. Bitcoin is harder to produce than fiat currency, and a group decides the issuance of fiat currency. No one decides the distribution of Bitcoin. If Bitcoin is a virtual currency, fiat currency is even more virtual. There are indeed air coins in the blockchain, but the coins converted from external resources are not air coins. Air currency is a credit currency.

The references to the asset, credit, and air currency are accurate, while the reference to virtual currency is not accurate. The reference to virtual currency implies that only fiat currency is currency, and nothing else is currency. Fiat currency is only a kind of credit currency.

 

25. Bitcoin is an asset currency

Using the judgment method of 22, Bitcoin is produced by electricity and equipment, and it is a commodity and an asset. Has most of the properties of money. The characteristic of asset currency is that it has value in itself; that is, it has at least stored value. Just like gold itself has value.

 

26. Bitcoin is not a credit currency

Credit currency is endorsed by credit, and Bitcoin has no credit endorsement. Fiat currency is a credit endorsement. Fiat currency is supported by national credit or endorsed by the country's power. Regime changes in democracies do not affect the legal status of the country's fiat currency.

 

27. The difference between asset currency, credit currency, and air currency

The asset currency is endorsed by the assets that have been realized, and the credit currency is supported by the assets that can be realized in the future. Asset endorsement represents its value, and the value is not easy to disappear. The fiat currency itself has no value, and its value will disappear with the disappearance of the country's credit. No credit currency can realize asset endorsement; it is air endorsement, called air currency. The achievability of achievable assets is very elastic, especially intangible assets, where the uncertainty is high, and the achievability is poor.

 

28. Bitcoin is not an equity currency

Bitcoin does not represent the value of the Bitcoin system. Equity currency represents the value of the project. Equity currency and stocks have the exact nature but are issued in different ways. There are more uses for equity coins. The discussion of equity coins is not the content of this section.

 

29. Definition of three primary functions of money

Currency has more than ten criteria, which are defined from different angles. There are three basic functional definitions from an exchange point of view. Stored value, medium of exchange, and scale of value. Currency evolved from barter exchange, and there is no strict definition. There are three primary functions that not all coins have. The stored value is the most basic definition of money of all the definitions of money.

 

30. Bitcoin and stablecoins are both asset currencies, but there are differences

Stablecoins meet the three functional definitions and have the functions of storing value, trading medium, and value scale. However, Bitcoin is not a measure of value. Therefore, Bitcoin does not meet the basic definition of currency exchange.

 

31. Bitcoin should back stablecoins

Stablecoins are now backed by legal tender, and there is no way around it. On the gold standard, the stable currency is supported by the asset gold and uses gold to undertake the three primary functions of money. Therefore, it is reasonable for stablecoins to be endorsed by the asset coin Bitcoin in the future.

 

32. Bitcoin is a token

The token is a big concept, a kind of certificate, and a certificate representing a medium of exchange. For example, points, coupons, equity, and currency are all tokens. Since tokens are a big concept, they should represent categories, just like economics or philosophy represent categories. However, tokens did not form a category and did not form a discipline, so this term is not commonly used.

 

33. Historical evolution of currency forms

Currencies evolve.

It was first in physical form and eventually evolved into gold.

The form of banknotes has evolved from coupons to legal tender.

The form of digital currency is a string of numbers, which is the digital evolution of fiat currency.

There are two types of digital currencies: centralized and decentralized. The fiat-like currency form is the centralized form. The gold-like form is the decentralized form.

 

34. Bitcoin is a digital currency, not a digital fiat currency

The scope of digital currency is smaller than that of the token, and it is more accurate than the reference of virtual currency. Digital currency is a general term including two forms. The CBDC issued by the central bank is called digital fiat currency, which has the nature of credit currency as fiat currency. Similarly, Alipay also circulates the digitization of fiat currency. The difference between the two is that the function definitions are different. The central bank's CBDC has more functions, including the digitization of fiat currency. Digital fiat currency is a digital currency.

Digital currency, like currency, is a descriptive definition with a broad meaning. For example, Bitcoin is a digital currency, not a digital fiat currency. But it is possible to become a digital fiat currency.

 

35. Bitcoin is the digital currency with the lowest blockchain risk

Compared with other cryptocurrencies, Bitcoin the risk is also much smaller. Digital currencies representing equity are not supported by computing power. Depending on the value of the project, there is a risk of zeroing, just like penny stocks seen in the Hong Kong stock market.

 

36. Bitcoin has a monopoly position among similar digital currencies in the blockchain

Bitcoin is issued using POW proof of work. There are still several companies that use the POW method to issue currency. However, they add up to less than 5% of Bitcoin's market capitalization. As a result, Bitcoin has market exclusivity and a monopoly position.

 

37. Digital gold undervalues Bitcoin

The reference to digital gold is to compare Bitcoin with gold. Gold has already withdrawn from the field of currency circulation. Satoshi Nakamoto called bitcoin "coin" because he hoped that bitcoin would have the circulation value of the currency. The statement about digital gold does not fully include Satoshi Nakamoto's original intention. The digital gold argument is undervalued for bitcoin.

 

38. Bitcoin improves on the shortcomings of gold

The design of Bitcoin is modeled after gold; in addition to the same stored value as gold, it also increases the value of the medium of exchange. Like gold, not a price measure. Therefore, it is necessary to equip Bitcoin with a ruler to realize the Bitcoin standard. Gold is not a digital currency, while Bitcoin is a digital currency. Under the Internet, the conditions for using gold to realize the gold standard again are far less realistic than the Bitcoin standard. Under the condition of the Bitcoin standard, Bitcoin can finally realize the functions of value storage, transaction medium, and value scale.

 

39. Bitcoin is a cross-sovereign currency

Bitcoin, like gold, is a cross-sovereign currency. Bitcoin has better liquidity than gold and has the role of a trading medium that gold does not have. Fiat currencies have sovereign limitations. There are only a few fiat currencies that are partly trans-sovereign.

 

40. Bitcoin standard is the king status that Bitcoin should have

The Bitcoin standard is the largest application of Bitcoin's stored value, and it is also the largest application of Bitcoin, exceeding all applications of the blockchain combined. It is king.

 

written in the back

This series provides the conceptual explanations and summaries needed to read chapters 10-13 of the article "Invite Satoshi Nakamoto to welcome the new world" and the previous article Q&A 1-10.

1. Full-text links

This article was published in Bitui Serial.

Chinese link:

https://www.bitpush.news/articles/tag/%E8%AF%B7%E5%87%BA%E4%B8%AD%E6%9C%AC%E8%81%AA

English link: https://en.bitpush.news/?s=Weisha+Zhu

2. Supplementary video explanation (over the wall in China)

This series of articles has been explained on Sun TV, and the papers and TV explanations are complementary.

The TV show is the interpretation of the point of the article. Broadcast schedule: The broadcast schedule is as follows:

Every 1, 3, and 5, Beijing time noon.

Sun TV's link is as follows:

https://www.youtube.com/watch?v=5dTend6oJ-8

The whole program is divided into two parts. The first part proves who Satoshi Nakamoto is, and the second part is about the Bitcoin standard. The program will continue, followed by discussions and Q&A, hoping to form a Bitcoin-based theoretical system. Users are welcome to leave messages in the TV comment area, and viewers will be selected to participate in the conversation.

By Weisha Zhu

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