BTC continued to fall overnight at 61k. In the morning, a simple review of investment records revealed that since 2024, the average cost of increasing positions in BTC is 67.7k (a floating loss of 9.9%). However, if we calculate from September last year, the average cost of increasing positions is 55.4k (a floating profit of 10%). Compared to the mindless regular investment of 52.8k, the purchase is slightly more expensive. The main reason is clear: the investment in the 30-50k range in the second half of 2023 to the beginning of 2024 was insufficient, and after late April, the main replenishment was in the 60-70k range, resulting in an overall increase in the average cost. Upon reflection, I still prefer to increase positions on the left side, that is, to operate against the trend, to board the car when retreating. However, when faced with the continuous and violent right-market situation, I always lag behind and cannot catch up.
Overall, over the years, the overall holding cost of BTC has been continuously raised to the current level of 14.5k (a floating profit of 320%). The CAGR of the compound growth rate is approximately 27%. Although it is still not 30%, it can be said that it is not inferior to many other investment methods, or even slightly better. The ability of Jiaolian to achieve such results through imperfect and often counterproductive operations is primarily due to the adoption of the correct strategic thinking.
First-class strategy, third-rate tactics, although often not able to achieve first-class results, at least can easily remain invincible. However, the first-class tactical ability only has the strategic thinking of the third class, and often ends in failure. In this market, there are many clever and hardworking people who are constantly being cut, liquidated, and failing. Even if some individuals hit the jackpot in certain cycles and suddenly become rich, they often quickly return the principal and interest, and cannot continue to achieve victory or expand success. The lessons are not far away, which is sighing.
In the eyes of Jiaolian, the essence of BTC is a new production relationship in the post-capitalist era.
Let us define “value” as a certain proportion between the products. Just like length and weight, any two products also have a certain value relationship, one with a large value, and one with a small value. From qualitative comparison to quantitative comparison, we need to introduce measurement and measurement tools. Meters are used for length, and rulers are used for measuring tools. Grams are used for weight, and scales are used for measuring tools. Monetary units are used for value, and people’s hearts are used for measurement tools.
A single product cannot be said to be long or short, light or heavy, large or small in value, only when compared with other products, there can be such a relationship between length, weight, and value. Therefore, relationships are relative rather than absolute.
However, length, weight, and value are all objective facts and are an objective attribute of the product itself. However, value is different from length and weight. The ruler for measuring length and the scale for measuring weight are standardized, tangible, visible, and touchable. The measuring rod for measuring value cannot be seen or touched in everyone’s heart. The so-called “people have a yardstick in their hearts” cannot be seen or touched.
BTC miners have produced the most primitive products of BTC: the accounts of BTC, or strictly speaking, the block space of BTC. Paying BTC as an on-chain handling fee, or “mining fee”, is essentially competing for the limited block space that is generated approximately every 10 minutes.
Of course, this block space is very different from our ordinary disk storage space. Like a car and the raw materials such as steel and rubber used to make a car, they are very different. This block space is generated by an extremely powerful computing power, which is proven by the PoW work proof. All data written into the block space is stamped with a “reliable” or “safe” mark by this proof. Even the most powerful power on earth today cannot shake it, the most powerful force cannot defeat it, and the most powerful capital cannot buy it!
Is there value in such a product? Of course, there is value! How big is this value? It is currently about 1 trillion US dollars – that is the current market value of BTC.
Some people may argue that market value is not the measure of this value, it should be the total income of the miners (for example, it was more than 10 billion US dollars in 2023). Moreover, today, a large part of the total income of the miners comes from block rewards, which is the newly added BTC, and only a small part comes from user payment fees. Only the handling fee is the real cost paid for the block space, reflecting the market value of the block space. Calculated in this way, the value is even smaller, probably only 5% to 10% annually, that is, 5-10 billion US dollars.
Not so.
With such “safe” block space, BTC’s transfer transactions can be safely recorded, and these transactions, that is, the transfer of value, have emerged as the value unit – BTC. BTC as a symbol is defined by humans, and its emergence as a value unit is the result of the system. The output of BTC is determined by a deterministic, open, transparent, and unchangeable mathematical formula. The high-security block space is the guarantee that this mathematical formula can be faithfully executed. This makes BTC a very good tool for storing value.
In other words, the above characteristics of BTC mean that it has the ability to attract more and more people to switch temporarily unspent money into BTC as a form of savings. Keynes said, “Savings are investment.” When you decide to store value in BTC as savings, the value actually becomes capital – the value that can automatically generate new value.
For example, if you spend 61,000 US dollars today to buy 1 BTC and store it in a cold wallet, the value of 61,000 US dollars, after bypassing the turnover in the market, is ultimately transferred to the hands of a person who sells 1 BTC. After receiving this value of 61,000 US dollars, this person may consume or invest in production. In the case of considering investment in production, he uses this value to purchase the capital needed for production (such as site, machinery, labor, etc.) and produces value far exceeding 61,000 US dollars. Then he takes out some of the money earned and exchanges it back into BTC.
Let’s assume that this boss or individual producer is an extremely efficient producer, and he has a huge advantage over other competitors in the market. He produces a huge surplus value, which allows him to re-purchase BTC with (61000 + x) US dollars in the near future.
If such a competitive winner can not only completely repurchase the BTC that was originally bought and net losses from selling coin consumers and losing producers, but also buy back a little more, then their purchase is enough to push BTC up. The BTC position in the hands of the savers who hoard BTC will appreciate due to the rise of BTC. This appreciation comes from the value generated by productivity outside the BTC system, which flows back into the BTC system. For savers who hoard BTC, it is as if the value of BTC has “automatically” increased.
The BTC from the perspective of hoarders has the function of preserving value and automatic appreciation, thus becoming an excellent “store of value” (SoV). It is precisely because BTC is an excellent “store of value” that the reinvestment of the value of the investment outside the system into BTC has occurred.
It can be imagined that if BTC cannot continue to hold or even destroy value, such as most “one-wave” altcoins that are constantly plummeting, only idiots would reinvest the value into such a “reaper”.
Therefore, the market value of BTC not only reflects the original value of BTC’s block space for BTC transfer transactions, but also reflects all the value transferred by BTC, which is converted into capital, invested in production or reproduction, and generates greater value, and then this value flows back into BTC. This total estimated value of a large value creation and circulation cycle.
From this logical deduction, we can extend it to the future. What’s more wonderful is that such a system produced independently by all people is shared by all BTC holders! Co-creating value, sharing value, this is very close to the ideal picture of the “Great Unity Society”.
The only slight shortcoming is the great improvement of productivity and great material abundance. However, in today’s situation of bursting industrial capacity and rapidly changing technologies such as AI, perhaps only after the so-called “Fourth Industrial Revolution”, can we truly produce a massive amount of goods endlessly, everything is available, everything is “9.9 yuan free shipping”…
The manifestation of greatly improved productivity is definitely that commodity prices are getting lower and lower, and the BTC you hoard will become more and more durable today, and will never be spent. Today’s mainstream economists – capitalist economists – are very afraid of this because this phenomenon is called “deflation” in textbooks, and deflation is terrifying.
Why are economists afraid of deflation? It is because today’s mainstream economists are essentially thinking about problems from the standpoint of capitalist ideology. Capital is afraid of deflation, so they are also afraid of deflation.
Why is capital afraid of deflation? Because deflation means reduced or even negative profits, bankruptcies, layoffs, unemployment of employees, and income stops, class decline, back to poverty, and society falls into turmoil.
For the sake of discussion, Jiao Lian regards the traditional capitalist production relationship –
