Why Bitcoin is becoming less and less (why Bitcoin is enduring)

Why Bitcoin is getting less and less Editor’s note: This article is from Nakamoto Onion (ID: xcongapp), written by Tudou Ge, and published by Daily Planet Daily with authorization The supply of Bitcoin has been consistently low and has been continuously declining over the past year. But now it’s getting fewer and fewer, why? The reasons are as follows:

1. Bitcoin prices are volatile

2. The correlation between the price of Cryptocurrency and other markets has increased, which does not necessarily mean that people prefer it to its substitute As institutional investors enter the market, more people are paying attention to it When you have a new thing, it may become more valuable, but it will not be as scarce as we have seen before 5. Without government regulation, Bitcoin will no longer have the function of serving as a medium of exchange, resulting in a significant reduction in transaction costs 6. “Decentralization” is a very interesting concept because Bitcoin is not completely transparent and can be accessed and verified by anyone, nor can it become a “financial asset” Although Bitcoin still has a large market share, in 2019, this proportion has risen to around 70% According to data from bitcoinist.com, there were over 2 trillion Bitcoins in circulation in the first quarter of 2019, of which less than 3% were held and operated by Chinese miners. Since 2017, this number has grown to over $10 billion and is steadily increasing; From the above figure, it can be seen that there were approximately 200000 transactions in the first three quarters of 2017, accounting for about 80% of the total amount It is also worth mentioning that since the fourth quarter of 2019, Bitcoin has only had an average of over 1000 active addresses per day, and shortly after reaching its peak in early 2018, it suddenly disappeared in half. This means that for most of 2020, this data has remained relatively high. So based on the data from the third quarter of this year, the number of new addresses added in the third quarter of 2019 may only be gradually decreasing, and it may take several years to return to normal

Why Bitcoin Has Lasted for a Long Time

Since its inception, Bitcoin has experienced a series of events such as significant price fluctuations, major declines, and crashes In the past decade, due to the development of technology and economic factors, its development speed has been faster than ever before, so it has been receiving attention from everyone. But as time passed, it still maintained a high-speed growth trend; And this trend is still ongoing, with its impact far higher than other investment categories, such as bond or stock markets and gold Although this history has proven the value of Bitcoin as an asset, if we treat it as a tool to hedge against currency depreciation, then they are ‘safe havens’. Why is this happening The first thing we need to consider is how people often encounter problems when using banks or payment institutions for transactions: how to transfer funds from fiat currency to Bitcoin, and how to make these funds be transferred through legal channels. In the traditional financial world, this problem is very common because there are many unnecessary frictions (such as high electricity bills) when you exchange cash for goods and services. For the encrypted world, this is a new way of risk avoidance – in order to avoid systemic crises, it is necessary to find the best solution to solve the above problems. Secondly, there are many security vulnerabilities in Bitcoin that cannot effectively protect users from potential losses, so most people still cannot understand, especially those who lack the ability to control their own funds, such as worrying about potential huge losses. In addition, the term ‘hacker attack’ is also the most common example In fact, according to Coinmarketcap data, from July to October 2019, over 600 million BTCs were in circulation worldwide and were constantly reaching new highs every day. Although the price of Bitcoin has fallen by more than 50% for most of 2018, it has still risen by nearly 200% in recent quarters. Of course, this is because there have been more fraudulent activities in the market, some of which even criminal activities, including dark web platforms, have led to a sharp rise in Bitcoin prices. However, just a few days ago, a user named “Bitcoin” (also known as Btc) stated that their account had a large amount of Bitcoin, and he did not realize at the time that his account held less than one Bitcoin. That is to say, the average cost for this user is only around $0.005, and it will take approximately 4 days to complete this operation The same phenomenon occurred at the end of 2017, when Bitcoin prices began to decline at the beginning of this year, due to investors’ fear of missing opportunities and buying in large quantities. However, the situation seems to be different now. At the end of November last year, the U.S. Securities and Exchange Commission (SEC) announced that it was evaluating whether to allow Bitcoin Exchange to trade fund trading products, and was preparing to go public to raise more capital to meet regulatory requirements before the first quarter of 2020 In fact, during the first four months of 2020, all major market participants had a positive and optimistic attitude,