When meeting someone for the first time in the currency circle, the most common question is "How to jump into the rabbit hole", the allusion comes from Lewis Carroll's 1865 classic Children's In the novel Alice's Adventures in Wonderland, the first chapter is "Down the Rabbit Hole", which was later extended as a metaphor for unconsciously falling into a world of inverted logic, and living a completely different life from then on.
Bitcoin standard, explained in vernacular, means looking at the world based on Bitcoin. This seems to explain it, but it doesn't seem to say anything. At best, it just expands on the literal meaning, and those who don't understand continue to be confused. My own experience tells me that the reason why Bitcoin is difficult to understand is not because the concept is difficult, but because it is completely contrary to the logic we have internalized over the years, so that it makes people feel like they are fighting against reflex nerves, which feels extremely unnatural. Therefore, The deeper people get into the traditional system, the less they understand the Bitcoin standard.
Now, let us once again invite two old friends, the US dollar (America) standard Alice and the Bitcoin (Bitcoin) standard Bob, to substitute their respective To understand different aspects of investment from this perspective, you can appreciate the Bitcoin-based world view, experience Alice in Wonderland, and how logic is turned upside down after falling into the Bitcoin rabbit hole.
Picture: British Library public domain
Bob: Convert U.S. dollars and a small number of foreign exchange, funds, stocks and other assets into Bitcoin at the end of each month, and add Bitcoin The total amount of cryptocurrency assets denominated, Bob gets his total asset value.
If you intend to implement the Bitcoin standard, settling in Bitcoin is the basic step. If you can’t even figure out how many Bitcoins your assets are, it’s impossible to talk about the Bitcoin standard.
Alice: When the asset is in US dollars The existence of the pattern represents parking, that is, no investment. When Alice is optimistic about the potential of X, she will "buy X", that is, exchange X for dollars; when exiting an investment, she will sell
Bob: When an asset exists in the form of Bitcoin, it means parking, that is, there is no investment. When Bob is optimistic about the potential of X, he will buy X, that is, exchange X with Bitcoin; when he withdraws from an investment, he will sell
I once recommended buying 0.001 BTC USD every day in "Bitcoin breaks all-time high, five things to remember in the bull market". A reader kindly reminded me that I made a mistake. ; No, that was not a typo, I meant exactly buying USD in BTC every day. I’m not being hypocritical when I write this. The numbers are indeed the same as selling 0.001 BTC every day, but the mentality is exactly the opposite, using the logic of the rabbit hole. From Bob's perspective, it's not that the price of BTC is high so he sells it, but that the price of the U.S. dollar is very low so he buys it and sells it after it appreciates to get back the bitcoin and make money.
Alice: Quote in US dollars. In Alice's eyes, 1 BTC = 100,000 USD, 1 ETH = 4,000 USD, 1 AAPL = 169 USD, and a Tesla Model 3 sells for 40,000 USD; Alice occasionally uses Coinmarketcap to check currency prices, and chooses US dollars to display the prices of various cryptocurrencies. price.
Bob: Quote in Bitcoin. In Bob's eyes, 1 USD = 0.000014 BTC, 1 ETH = 0.052 BTC, 1 AAPL = 0.0024 BTC, and a Tesla Model 3 sells for 0.557 BTC; Bob often uses Coinmarketcap to check currency prices, and uses Bitcoin to display various cryptocurrencies. price. Just like Americans check the price of foreign currencies against the US dollar, Bitcoin is the legal currency in Bob's mind, and altcoins are foreign currencies; sometimes he converts part of his Bitcoin into altcoins because he is optimistic about its potential, and sometimes because he needs to use this " foreign currency". In addition, Bob will also use Fiatmarketcap to check the prices of more than a hundred legal currencies in the world. For example, the market value of the RMB is 584,862,949 BTC, and the current price of 1 RMB is 195 sats, which is 0.00000195 BTC.
One of the reasons why the Bitcoin standard is so difficult to practice is that the quoted currency is not dominated by individuals but society. The US dollar quotation is the mainstream in the world. It is difficult to practice the Bitcoin standard. It is necessary to constantly convert, just like foreign tourists looking at the McDonald's menu. They must first convert it back to the standard legal currency before they can understand how much the hamburgers cost. Different from Taiwan and Hong Kong, the legal currency has a relatively fixed exchange rate with the US dollar, and the order of magnitude is small. For example, 1 US dollar is exchanged for about 8 Hong Kong dollars or 30 Taiwan dollars. It is difficult to quote the price when converting into Bitcoin without using a computer. It is like when traveling to Vietnam, you need to check the price. Multiply by 0.00004 to convert to U.S. dollars, greatly raising the mental accounting barrier.
Alice: Take the US dollar as the coordinate ; "Making money" means that after converting assets into U.S. dollars, the amount of U.S. dollars on hand increases. For example, I bought AAPL 4 years ago for 67 mg and sold it for 169 mg today, making a profit of 152%; Another example is that I bought 173 mg 4 years ago. ETH, sold today at 3,644 mg, making 2,000%. Although Alice sometimes converts U.S. dollars into other assets, the investment goal is to increase the number of U.S. dollars on hand in the long run (what a nonsense), so the assets will be converted back to U.S. dollars when harvesting.
Bob: Taking Bitcoin as the coordinate; "Making money" means that after converting assets into Bitcoin, the number of Bitcoins on hand increases. If Bob and Alice make the same investment decision, they buy AAPL for 0.0091 BTC 4 years ago and sell AAPL for 0.0024 BTC today, which is a huge loss of 74%; they buy ETH for 0.024 BTC 4 years ago and sell it for 0.052 today. ETH is a small profit of 116%. Although Bob sometimes exchanges Bitcoin for other assets, the investment goal is to increase the number of Bitcoins on hand in the long run (no nonsense), so the assets will always be exchanged back for Bitcoin when harvesting.
If Bob's logic is too difficult to accept, you can compare it with the logic commonly used by stock investors, the Hang Seng Index standard. Suppose Carol bought CLP Power at 34.1 HKD during SARS in 2003 and sold it at 62.3 HKD today, making a profit of 83% in Hong Kong dollar terms (dividends during the period are ignored for simplicity, although in fact they should be taken into account); however, during the same period, the Hang Seng Index It rose from 8,579 points to 16,854 today, an increase of 96%. Therefore, based on the Hang Seng Index, this investment lost 14%.
Alice: Bitcoin in three Breaking through all-time highs at the beginning of the month, the prices of cryptocurrencies, led by Bitcoin, have generally risen significantly. At the end of 2023, the BTC price is 40,000 USD. Alice holds 1 BTC and 80,000 USD, with a total asset value of 120,000 USD; now the BTC price has risen to 70,000 USD, and Alice's total asset value has risen to 150,000 USD, earning 25%. Alice regrets not buying more Bitcoin at the end of last year and missing out on the rise in Bitcoin during this period.
Bob: The U.S. dollar fell below a record low in early March, and the overall price of legal currencies led by the U.S. dollar fell significantly. At the end of 2023, the US dollar price was 0.000025 BTC, and Bob held 1 BTC and 80,000 USD, with a total asset value of 3 BTC; now the US dollar price has dropped to 0.000014 BTC, and Bob's total asset value has dropped to 2.14 BTC, a loss of 29%. Bob regretted not selling the U.S. dollar at the end of last year and could not avoid the decline of the U.S. dollar during this period.
The big bull in the currency market is actually losing money. Is this logic becoming more and more difficult to accept? Please think a little deeper. When you think that cryptocurrencies will enter the bull market in 2024, you are looking at the world from the US dollar standard. In fact, for Bob, who is Bitcoin standard, legal currency will enter the bear market from 2024. Hold The more U.S. dollars, the greater the loss. This is an intuitive arithmetic. I believe that holding U.S. dollars has no risk. At most, it will just miss the opportunity to make money, all because I forget that I am based on the U.S. dollar.
In the final analysis, "X-centeredness means that our entire life is surrounded by X without realizing it."
Finally, Bitcoin is a rabbit hole. Falling into the pit all of a sudden, making you dizzy and doubting life is normal. Let us stop for now and let Alice digest it first. Take a moment, and come back later to talk about how Bitcoin-based Bob was created.
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