jakiro
The most common question when you first met someone in the currency circle isHow to jump into a rabbit hole”, the allusion comes from the classic children’s novel Alice’s Adventures in Wonderland in 1865. The first chapter is “Down the Rabbit Hole”, which was later extended to a metaphor that unconsciously fell into a logically inverted world, and since thenA completely different life.
Bitcoin Principal, in vernacular, it is based on Bitcoin to see the world.This seems to be explained, but it seems that nothing is said. At best, it is just expanding the literal meaning, and if you don’t understand it, it will continue to understand.My own experience tells me that the reason why the Bitcoin standard is difficult to understand is not because of the difficult concept, but is completely contrary to our logic that has been internalized over the years, so that it makes people feel extremely unnatural, and therefore,The deeper you get into the traditional system, the less you don’t understand the Bitcoin standard.
Below, let us invite two old friends again, Alice, the US dollar (America) standard and Bob, to apply them to their perspective to understand the different levels of investment, so as to appreciate the Bitcoin standard worldview.Experience Alice in Sleeping in Wonderland, how the logic is reversed after falling into the Bitcoin rabbit cave.
Picture: British Library public domain
1. Completion
Alice: Bank monthly statements convert foreign exchange, funds, stocks and other assets into US dollars, and the exchange compiles the total value of US dollars such as Bitcoin and Ether, and Alice calculates the total value of his own assets.
Bob: At the end of each month, he converts US dollars and a few foreign exchange, funds, stocks and other assets into Bitcoin, and adds the total amount of cryptocurrency assets denominated in Bitcoin, Bob obtains his total assets.
If you intend to practice the Bitcoin standard, settlement with Bitcoin is the basic step.If you can’t even figure out how much Bitcoin your assets are, there is no way to talk about the Bitcoin standard.
2. Buy Sell
Alice: When an asset exists in a US dollar form, it means there is no investment.When Alice is optimistic about X’s potential, she will “buy X”, that is, exchange US dollars for X; when she exits an investment, she will sell X, that is, exchange X back to US dollars.
Bob: When an asset exists in a Bitcoin form, it means that there is no investment.When Bob is optimistic about X’s potential, he will buy X, that is, exchange Bitcoin for X; when he exits an investment, he will sell X, that is, exchange X back to Bitcoin.
I once suggested buying 0.001 BTC dollars every day in “Bitcoin breaks through historical highs, remembering five things in the bull market”, and some readers kindly reminded me that I wrote it wrong; No, that’s not a typo, I mean it in BTC.Buy US dollars every day.I’m not a mystery about writing this way. It’s true that in terms of numbers, this is no different from selling 0.001 BTC every day, but my mentality is the opposite, using logic in the rabbit cave.From Bob’s perspective, it is not that BTC is very high and therefore sells, but that the US dollar is very low and therefore buys. After it appreciates, it sells to get back Bitcoin and make money and leave the market.
3. Quotation price
Alice: Quoted in US dollars.In Alice’s eyes, 1 BTC = 100,000 USD, 1 ETH = 4,000 USD, 1 AAPL = 169 USD, a Tesla Model 3 sells for 40,000 USD; Alice occasionally uses Coinmarketcap to check the price of the coin and selects USD to display various password currencies.price.
Bob: Quoted in Bitcoin.In Bob’s eyes, 1 USD = 0.000014 BTC, 1 ETH = 0.052 BTC, 1 AAPL = 0.0024 BTC, a Tesla Model 3 sells 0.557 BTC; Bob often uses Coinmarketcap to check the price of the currency and selects Bitcoin to display various passwords.Price.Just like the Americans check the price of foreign currencies against the US dollar, Bitcoin is the legal currency in Bob’s mind, and altcoins is the foreign currency; converting some bitcoins into altcoins is sometimes because they are optimistic about their potential, and sometimes because they need to use this kind of “foreign currency”.In addition, Bob will also use Fiatmarketcap to view the prices of more than 100 fiat currencies in the world. For example, the market value of RMB is 584,862,949 BTC, and 1 RMB is currently priced at 195 sats, which is 0.00000195 BTC.
One of the reasons why the Bitcoin standard is so difficult to practice is that the quotation currency is not dominated by individuals but society. The US dollar quotation is the mainstream of the world. Practicing the Bitcoin standard requires continuous conversion in your mind, just like a foreigner looking at McDonald’s menu.You can first exchange it back to the legal currency to understand how much the hamburger costs.Unlike Taiwan and Hong Kong legal currency, which has a relatively fixed exchange rate with the US dollar, and the order of magnitude is small. For example, 1 US dollar is about 8 Hong Kong dollars or NT$30. It is difficult to exchange it for Bitcoin without using a computer. It seems that traveling to Vietnam requires price.Multiply by 0.00004 to convert into US dollars, and mental accounting barriers have greatly improved.
4. Profit and loss
Alice: Use the US dollar as the coordinate; “Making money” means that after converting assets into US dollars, the US dollar at hand increases. For example, buying AAPL for 67 magnesium 4 years ago, and selling them for 169 magnesium today, making 152%; For example, 4 yearsI bought ETH at 173 magnesium and sold it at 3,644 magnesium today, making 2,000%.Although Alice sometimes converts the dollar to other assets, the investment goal is to increase the dollar at hand (very nonsense) in the long run, so it will convert the assets back to the dollar when harvesting.
Bob: Take Bitcoin as the coordinates; “Making money” means that the Bitcoin at hand increases after the assets are converted into Bitcoin.If Bob and Alice made the same investment decision, they bought AAPL at 0.0091 BTC 4 years ago and sold AAPL at 0.0024 BTC today, which was a huge loss of 74%; they bought ETH at 0.024 BTC 4 years ago and sold today at 0.052ETH, a small profit of 116%.Although Bob sometimes converts Bitcoin to other assets, the investment goal is to increase the Bitcoin at hand in the long run (not counting nonsense), so he will always convert the assets back to Bitcoin when harvesting.
If Bob’s logic is too difficult to accept, you can compare the logic commonly used by stock investors, the Hang Seng Index standard.Assuming Carol bought Zhonghua Power at 34.1 HKD during SARS in 2003 and sold at 62.3 HKD today, the HKD standard will make 83% (for simple reasons, ignore the dividends during the period, although they should actually be taken into account); however, the Hang Seng Index during the same periodFrom 8,579 points to 16,854 today, an increase of 96%, so at the Hang Seng Index standard, the investment lost 14%.
5. Mind state
Alice: Bitcoin broke through an all-time high in early March, and the price of cryptocurrencies led by Bitcoin rose significantly overall.At the end of 2023, the price of BTC was 40,000 USD, Alice held 1 BTC and 80,000 USD, with a total asset value of 120,000 USD; the current BTC price rose to 70,000 USD, and Alice’s total asset value rose to 150,000 USD, making 25%.Alice regrets not buying more Bitcoin at the end of last year and misses the rise of Bitcoin during this period.
Bob: The US dollar fell below a record low in early March, and the price of fiat currencies led by the US dollar fell significantly overall.At the end of 2023, the US dollar price was 0.000025 BTC, Bob held 1BTC and 80,000 USD, and the total asset value was 3 BTC; the current US dollar price fell to 0.000014 BTC, and the total asset value of Bob dropped to 2.14 BTC, a loss of 29%.Bob regrets not selling the dollar at the end of last year and cannot avoid the decline of the dollar during this period.
But the bull in the currency market is losing money. Is this logic becoming increasingly difficult to accept?Please think deeper. When you think that cryptocurrency enters a bull market in 2024, it is itself a view of the world from the US dollar standard. In fact, for Bob, who is a Bitcoin standard, starting from 2024, it will be a legal tender that will enter a bear market.The more dollars you have, of course, the greater the losses. This is an intuitive arithmetic. It is believed that holding the dollar is not risky, and at most it is just a missed opportunity to make money, because it is forgotten that you are at the US dollar standard.
After all, “X-based is that our entire life is surrounded by X and is not consciously conscious.”
Finally, Bitcoin is a rabbit hole, and it fell into a deep pit, dizzy, and suspected that life is normal. Let us stop for the time being, let Alice digest it first, come back later, and talk about how the Bitcoin-based Bob is refinedMade.
