Total market capitalization exceeded $ 1 trillion, bitcoin performance "second" to traditional assets, which reflects what problems?

The price of bitcoin has reached a new high. According to CoinDesk's data, bitcoin broke through the $50,000 barrier on the 16th, and touched $51,000 on the 17th. As of 7 a.m. Beijing time this morning, the price of bitcoin was up 7.4 percent to $56,055.74.

At this latest price, Bitcoin's total market capitalization is about $1.04 trillion. That figure is second only to Google, which has a market capitalization of $1.4 trillion, and higher than Tesla, which has a market capitalization of $750 billion, and could rank No. 5 in U.S. stocks. Guizhou Maotai closing price on February 19, the total market value of bitcoin coins equivalent to 2.17 times the total market value of Maotai.

Bitcoin's 2021 value grew by more than $415 billion to more than $1 trillion. In the past six months, the price of Bitcoin has risen about 350 percent. Market participants said that some institutions and large companies have recently indicated that they want to enter the digital currency field pushed up the price of bitcoin, and future changes in the flow of speculative funds benefited from the early stage and the attitude of the regulators may have an impact on its trend. At the same time, this has made more cryptocurrencies known, but the value of most cryptocurrencies, especially Bitcoin, fluctuates on a daily basis. While virtual currencies are meant to facilitate safer transactions, it's not hard to see through the recent price fluctuations of Bitcoin that its value is increasingly centered on speculation. Some crypto investors become millionaires overnight, but others may lose most of their wealth in a few weeks. It also shows the hugely unreliable nature of bitcoin, especially as a currency for goods and services.

So we might ask, why is Bitcoin skyrocketing, and why are so many long positions still popping?

In fact, this is all leverage and bitcoin-related options products caused trouble. Some of the mainstream trading platforms in the market can provide 100 times leverage for bitcoin trading. 100 times leverage means that as long as there is a 1% price change in the market, you will be out of business. The price fluctuation of bitcoin is very big, the market is like a roller coaster, a high and a low, which makes a lot of friends who want to speculate on the coin wrestle with the money, money has not earned, the capital has been lost.

In fact, there is a difference between investment and speculation, speculation is to look at an opportunity to wrestle, while investment is more concerned about long-term gains, the safety of the principal requirements are higher. But many people often can not distinguish what is investment, what is speculation. And the real risk often comes from the fact that you don't know what you're doing.

The controversy surrounding Bitcoin has never stopped, with some arguing that it is speculation, a Ponzi scheme, and that sooner or later it will be like the ? Tulip Bubble? as well as some people think it is the future of bitcoin's currency, decentralization is the trend, and the scarcity of bitcoin and pushed up its rise. So some are short, and some are long.

Bitcoin itself has a very high degree of independence through its distributed peer-to-peer network decentralized (decentralized) data storage and algorithm-based bookkeeping design. As the first digital currency to apply blockchain technology, Bitcoin has amassed a large community base over the past decade or so, with Bitcoin miners popping up all over the globe, which further strengthens the reliability of Bitcoin's distributed network. As the first cryptocurrency, Bitcoin's security is also reflected in the fact that no one has been able to crack it since its creation. These are the core values of Bitcoin and the factual basis on which Bitcoin can come to this day.

Secondly, it is the market demand for a more trustworthy monetary system

Analyzing it from another angle, then this surge can also be attributed to people's disappointment with the central bank's monetary policy, and the market needs a more trustworthy monetary system.

The epidemic is raging, giving countries an excuse to open up their printing presses to save their economies. The Federal Reserve is even more on full throttle, as of the third quarter has been 3 trillion dollars of water but little effect. The crisis of confidence in central bank money is a problem that everyone living in our time has to face. At this point, we can't help but wonder if we need a monetary system without a central bank. And Bitcoin happens to give us a lot of room for imagination. This expectation of a better future has also given rise to more investment value, but if that were all, without the push of institutions, bitcoin could not have risen so quickly in such a short period of time. Because the same expectations have been around since 2008 and have never changed.

Others

Of course there are a lot of other factors that have contributed to this wave of Bitcoin's rise beyond the two main reasons above. For example, in the last two years, new coin offerings have been halted by various countries, and after the explosion of the digital currency market in 2017, a large number of new digital currencies have appeared in the market. However, new coin offerings usually carry a high level of risk and there is a lot of behavior of a fraudulent nature in the market, so new coin offerings have been called off by various countries. The banning of new coin offerings, although a certain impediment to the development of digital currencies, but further fueled and stabilized the investment value of Bitcoin.

Potential Issues and Risks Facing Bitcoin

Technological innovation: the first challenge Bitcoin will face is technological innovation, Bitcoin's decentralized design is refreshing and at the same time restricts Bitcoin's development. Every upgrade to the Bitcoin protocol requires a **** understanding with various nodes on the network, but everyone has their own different views on Bitcoin, and **** understanding is often difficult to achieve. This problem has led to forks of Bitcoin, and the development of the Bitcoin protocol itself has been very slow. At the same time, with the development of science and technology, the realization and application of quantum computing will also break the security model of bitcoin built on the overall arithmetic of all the nodes on the network, and it is theoretically possible to realize the 51% arithmetic attack. This problem has not been solved so far. That is to say Bitcoin may suddenly not be as secure after the advent of quantum computing technology. Also due to Bitcoin's ****-aware mechanism, power consumption and hardware requirements are constantly rising. These problems have not been completely solved so far

Central bank digital currency issuance: In addition to some of the problems that exist in Bitcoin itself, Bitcoin will also face the challenge of central bank digital currency in the future. Part of Bitcoin's value lies in its blockchain application, and the blockchain transaction method is also a major direction for future banking development. By applying the same technology, central banks can better scrutinize economic activity and conduct macro-control, perhaps in a more favorable way. At the same time whether a digital currency issued on national credit will be easier to implement and better developed, we are not sure yet. But central banks are bound to compete with Bitcoin to some extent when they make similar attempts.

Much of Bitcoin's creation and early development was based on people wanting to build a fairer monetary system. But with the financialization of Bitcoin and the entrance of institutional investors, suddenly we find that a lot of Bitcoin is in the hands of financial predators. Bitcoin, as a cryptocurrency, has also been trading outside of regulation, and there is no legal requirement for institutional investors to disclose large purchases and sales of bitcoin to ensure fairness in the marketplace, which provides a lot of room for institutional investors to manipulate the market. Retail investors entered the market with a vision for digital currencies, only to end up being harvested by predators. After one harvest, more capital is in the hands of financial predators.