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Six Tricks Satoshi Nakamoto turned "air" into money
Summary: Six Tricks Satoshi Nakamoto turned "air" into money The first trick to turn "air" into money is: Have expectations of rising prices When making money, the most profitable thing is issuing currency. If you can issue currency, you don't need to make money. With the emergence of cryptocurrency, tens of thousands of people were issued ...
Six Tricks Satoshi Nakamoto turned "air" into money
The first trick to turn "air" into money is: Have expectations of rising prices
When making money, the most profitable thing is issuing currency. If you can issue currency, you don't need to make money. With the emergence of cryptocurrency, tens of thousands of people were issued coins, but most were "air." Distributing coins is not something everyone can do. You have credit, such as national credit or valuable endorsements. The most typical one is that the stablecoin is anchored to the US dollar, and the credit of the US dollar becomes the value support of the stablecoin.
Satoshi Nakamoto's issuance of currency is not the above two situations. However, why did Bitcoin change from "air" to money? What is the mystery? In the author's article, "What Satoshi Nakamoto didn't think of, what he didn't say... What is the key to Bitcoin's success?" (chainless.hk), Satoshi Nakamoto was quoted as saying the four major reasons for the success of Bitcoin. I think three are market reasons, but market reasons alone will not turn "air" into money. Another reason is that his innovation determines the key to turning "air" into money: "Choose a basically fixed monetary base." The entire monetary policy limits the total issuance to 21 million Bitcoins, which is reduced periodically. Half every four years. That means that Bitcoin price is expected to double in four years. After 33 cycles, the currency issuance is wholly completed, and it will take 132 years to form the Bitcoin standard. The goal is to eventually use Bitcoin to measure global wealth, just as gold once did. This expectation will bring about a long-term upward effect and maintain a 132-year upward trend. It has never been seen by humankind. No one can tell whether it will be realized. Satoshi Nakamoto didn't dare to say it, but it didn't stop him from doing it—holding the currency. Holding the money without moving has a demonstration effect, indicating that expectations are still there.
Satoshi Nakamoto's Bitcoin design, issuance, and holding process starts from scratch and achieves continuous profit, which is very worthy of analysis and study.
The second trick to turn "air" into money: collect idle value through games
Satoshi Nakamoto adopted the value aggregation method. Bringing together idle computer computing power, electricity consumption, and the user's own value to make Bitcoin comply with the principle of value conversion (mainly energy conversion). That ensures that Bitcoin's value has a source.
Everything is challenging initially, and collection must be carried out continuously, mainly by word of mouth. In the first year of Bitcoin's computing power, it remained lower than 1. Although there were many big names, such as Hal Finney's support in the first year, by the first difficulty adjustment on December 30, 2009, the computing power only increased by 18%. Reached 1.18%. Looking back at history, this was the golden age of mining. There are huge profits in the seed round. Satoshi Nakamoto designed this kind of huge profits by halving in four years, which is very helpful for early participants and word of mouth to gather human resources and computing power. Hal Finney mined 70 blocks, harvested 3,500 Bitcoins, and then stopped mining. His approach is similar to that of Satoshi Nakamoto, who only holds 5.42% of all Bitcoins. No matter how delicious the food is, there must be enough. Seed round investment will most likely fail. All in one, all may be lost. , it is gambling, not investment. But what if you seize the opportunity?
The following year, in 2010, Bitcoin's computing power increased by 12,000 times. This year, the MT.GOX Bitcoin exchange appeared. The transaction gave Bitcoin a money-making effect and attracted the attention of outsiders. The regular army began to enter the field, and the knockout rounds began. Those who are eliminated miss out on wealth.
The third trick to turn "air" into money: Improve your awareness
2010 is destined to be an extraordinary year for Bitcoin. On May 21 of the same year, American programmer Laszlo exchanged 10,000 Bitcoins for two pizzas, equivalent to the market price of US$50. People use it as the starting point for Bitcoin to generate value, so the initial value of Bitcoin should be $0.005. In November 2010, on Mt. Gox, the world's largest Bitcoin trading platform, the price of Bitcoin exceeded US$0.5, an increase of 100 times from the initial price. It has increased 100 times in less than half a year. If you don't sell, you will be a "fool." However, when Hal Finney heard the news, he downloaded the Bitcoins stored in his computer into a hard wallet and then deposited the wallet in a bank safe instead of selling. In 2009, he mined 70 blocks and received 3,500 Bitcoins. Hal Finney was the first Bitcoin trader, and Satoshi Nakamoto sent him 10 Bitcoins. At that time, Laszlo had over 80,000 Bitcoins, all of which he sold. Today, he pinned a tweet to the top of Twitter: "I am poor, and I need donations."
Laszlo made an outstanding contribution to Bitcoin. He was the first person to use GPU mining and an excellent programmer. However, Bitcoin is a vast industry, and the financial background knowledge required is far beyond the understanding of a technical person. He was once so close to wealth but only cashed out the part he's awareness.
On the third day after Bitcoin was released, Hal Finney proposed the famous Hal Finney conjecture, believing that the price of Bitcoin would exceed US$10 million. If so, 3500 Bitcoins is enough. A fundamental investment logic is to "reach the price" to reach the expected price. Please don't sell it for less than the price. Judging the reasonable expected price requires sufficient knowledge. There is a saying in the industry that "Don't do it if you are not familiar with it." Regarding capital, it is "don't invest if you are not familiar with it." Because it is impossible to predict future prices without familiarity, that is not investment but gambling.
For Bitcoin, Hal Finney is doing the right thing. He is an expert and not greedy. It is the point of view of diversified investment. Everything has risks; investing is not gambling.
The fourth trick to convert "air" into money: Can you speculate?
Earning the difference between fluctuating prices is, of course, another profit model - speculation. In addition to the gambling element, speculation also has the unspoken rule that the big fish eats the small fish. Small gambling is fun; short-term speculation can come quickly; speculation also has advanced skills, which cannot be mastered without suffering losses for several years. Long-term investment requires enduring hardship and cannot be achieved without knowledge and determination. Suffering is regret, not selling when the high point is reached, not selling high, and buying low. Doesn't Satoshi Nakamoto regret it? Doesn't Buffett regret it? If you have no regrets, you are an investor.
Both investment and speculation are arbitrageurs, and arbitrageurs are divided into four categories:
· Speculative type, specializing in short-term
· Investment type, specializing in long-term
· Investment-speculative type, doing both investment and speculation
· Typeless, random walking leeks
Leeks do not require knowledge because losing money buys excitement, and it is good to have money.
The fifth trick to convert "air" into money: Seize luck
Satoshi Nakamoto believed that Bitcoin seized the opportunity of the 2008 financial crisis. As the saying goes, small money depends on hard work, while big money depends on fate. Destiny is the grasp of opportunities. The early days of Bitcoin were destined to be an opportunity for programmers, not for most people. Where is the opportunity for a person? Chances are all around us. That is a positional advantage for each of us. The princes and the sons of ordinary people have different fates. The latter has fewer opportunities, so he must seize every fleeting opportunity around him. Cryptocurrency is an opportunity for the sons of ordinary people to achieve class leapfrog because everyone is equal before new knowledge. There is an opportunity because most people do not understand and are unwilling to learn, so it is incredibly precious to those willing to participate in the project in the early stages. We must give Big benefit. Seizing a project that may be successful at an early stage makes it possible to achieve class leapfrogging at a small opportunity cost. This benefit is the same as seed round investment; it is an expectation for the future, but it must be noted that the logic must be reasonable. How do we know if the logic makes sense? Did you notice that Satoshi Nakamoto asked you to pay? You have nothing to lose if you don't pay. It is the probability that Hal Finney said that the ratio of winning to losing is 100 million. If you win, you will profit 100 million US dollars; if you lose, it will be a US$1 electricity bill.
Satoshi Nakamoto understands the importance of early investors very well. The four-year halving rule is designed to encourage early participants. The core problem is that if early participants have no knowledge or do not understand, they will not be able to hold Bitcoin and will be complacent if they sell early. Then his intestines turned green. The "grasp" mentioned here includes two meanings: one is "Seize," and the other is "Hold". If you only seize but don't hold it, you will still miss out on wealth.
The sixth trick to convert "air" into money: steadfastness
Satoshi Nakamoto's Bitcoin has not moved, and Hal Finney's Bitcoin has not moved. Will we be more "experts" than them? There is nothing wrong with following Satoshi Nakamoto when investing in Bitcoin. He has not moved, and we must keep it as an investment. According to data from Finance M Square (macromicro) on July 27, 2023, the proportion of Bitcoins that have not been moved for one year reached 69.18%, reaching a new high. Now, more and more people understand this truth. The yellow line in Figure 1 is the coin price, and the blue line is the amount of coin hoarding. The scale on the left is the ratio, and the scale on the right is the coin price.
The proportion of Bitcoins that have not been moved for one year
Figure 1
There is a lot of information in Figure 1, but here are two tips:
1. The high point of coin price corresponds to the low point of hoarding coins.
2. The proportion of coin hoarding reaches a new high every cycle.
When talking about why Bitcoin is booming, Satoshi Nakamoto said: "The choice of a fixed monetary base ensured that early adopters received large windfalls when Bitcoin became popular, which also attracted those who distrusted the arbitrariness Monetary policy of the government." Many of Bitcoin's old addresses before 2010, like Satoshi Nakamoto, have never been touched. Many of those who do not believe in arbitrary monetary policy but believe in Satoshi Nakamoto's logic should be early cypherpunks. They hold the same views as Satoshi Nakamoto, and Hal Finney is the most outstanding representative. Many people in the cypherpunk circle have achieved class crossing because of this.
If you choose to invest, you must work hard to become an expert and a great expert. Only a few experts and only a few people make big money. In particular, cryptocurrency spans so much that it is challenging to have comprehensive knowledge. The reason why hoarding coins reaches new highs is probably because of the great power of Satoshi Nakamoto's example.
Your "air" doesn't necessarily turn into money
Of course, if you choose to be a speculator, you are free to do so. The charm of cryptocurrency opportunities lies in the currency's high volatility, but the traps are also profound. Everyone must be diligent enough, like going to work if they choose to speculate. It is a 24-hour, non-stop market. If you have assets on it, your assets may disappear without a trace when you wake up.
The logic of Bitcoin's design is to "ensure early adopters" profits, which is the logic of cryptocurrencies. It is difficult to judge whether early projects are good or bad, so there are unlimited innovations in cryptocurrency. Still, there are also unlimited scammers, and every scammer has a beautiful coat. How to spot a scammer? Finally, it is easy to identify early scammers. Remember that in the early days of Satoshi Nakamoto, he discovered the value of idle resources in the market and combined them skillfully. He did not directly raise funds from the market. How can he deceive you if you don't give money? Of course, once Bitcoin becomes bigger, it will no longer be a poor man's game.
Early-stage projects are in the professional market, and professional investors can make seed-round investments. Cryptocurrency does not have the same protection for investors as the stock market. If you have no knowledge base and participate in early-stage financing or All-in-one speculation, it is inevitable to become a leek. Some people are happy, and some are sad. Your "air" may not turn into money.
