Written by: Yishi

Note: This article was originally published on November 4, 2023, when the price of BTC was $34,522. The text has not been modified in any way. This article does not provide any investment advice and makes no position or judgment on subsequent market trends.

The following is the main text.

The storm is brewing. 1284 days ago, I released a video about the Bitcoin halving, predicting that the price would rise to $55,000 after the halving.

That day was April 17, 2020, and the closing price of Bitcoin was $7,125. A few years later, the halving is about to happen again, to be precise, sometime in April or May 2024.

This is the fourth Bitcoin halving in history, and the last chance for ordinary investors. Like a narrow crack in an ancient city wall under the setting sun, only a thumb's width remains. When that door closes, the last chance to get on board will be gone. Xiao Feng's biggest regret was not being able to save A'Zhu. "I am a Khitan, what great ambitions could I possibly have?" Like a golden bottle falling into a well, there's no turning back.

My biggest regret is that I've devoted myself to entrepreneurship for the past ten years, and before I've accumulated enough cryptocurrency, the game is about to end. That's just fate.

How to define scarcity

An Arab scholar, Saif al-Din Amos, wrote a book called "Bitcoin Standard" in 2018. In the book, he discussed a " stock-production " model, which is simply the relationship between inventory and annual production.

When we talk about inventory, we are counting the total quantity of a product. Annual production is the total amount of that product produced in a year. Dividing the two gives us a ratio called SF (Stock Production).

In the chart, you can see that the SF of gold is 62, and that of silver is 22. What does this mean? It means that it would take you 62 years to produce the same amount of gold as it does now, 22 years for silver, and 0.4 years for platinum. This all illustrates one thing: they are extremely scarce.

We started to wonder if these things became currency because they were scarce? In contrast, platinum and palladium have an SF value of 1 or less, which means they are not that scarce.

Indeed, gold has a stronger preservation value than any other metal in the table. The commodities we use in our daily lives, such as food, mobile phones, computers, and cars, all have a SF (Special Value) of far less than 1, meaning they have never been scarce. Why? Because as long as someone wants a commodity, you can produce it. Once someone wants to hoard it, the price will rise, and then more companies will produce it. The price will then inevitably fall.

This is common sense regarding supply and demand balance. Therefore, we can easily conclude that the higher the SF (supply, demand, and savings) of a commodity, the better it retains its value and the less likely it is to be diluted.

Look at gold. In 1972, it was $46 an ounce. In 2020, it reached a new high of $1,744 an ounce, a total increase of 37.9 times. So why don't we produce more gold to meet demand? The reason is that gold mining is limited by mining technology and costs. If you spend more on something than you ultimately earn, you certainly won't do it .

So, what is Bitcoin's SF (Significant Quantity) value? 19.5 million Bitcoins have been mined worldwide. However, a research report states that over 1.6 million of these 19.5 million Bitcoins have actually been permanently lost.

Therefore, only about 17.9 million Bitcoins are truly usable . Based on the current annual production of Bitcoin, its SF (Special Value) is approximately 54, similar to gold. In a few months, Bitcoin's SF will rise to 108, with an annual inflation rate of only about 0.9%. This means that Bitcoin will become the scarcest asset in human history since gold .

The halving is the fundamental reason for the change in Bitcoin's supply and demand, nothing else. And this supply and demand determines the price. Some people get excited at the mere mention of a Bitcoin ETF, as if its approval would instantly skyrocket the price. I suggest you ignore the hype in the media headlines and focus on the underlying principles.

Whether BlackRock's Bitcoin ETF is approved or not is unimportant, and when it's approved is also unimportant. What's important is the expectation of a Bitcoin ETF being approved. As bait to boost market confidence, it will gradually build momentum and, imperceptibly, push the price above $45,000 in the future. You might think you're still in a bear market, but the bear market has quietly ended without you even realizing it. And this momentum will continue; it's not like your tap water.

BlackRock and the subsequent ETFs, like the Suez Canal, connect old money with new pools. The sheer size of these insurance funds from traditional finance exceeds many people's imagination. Bitcoin isn't too expensive for them, but rather too cheap; its market capitalization is too small.

The Suez Canal, a magnificent waterway, connected Europe and Asia, enabling north-south water transport. From then on, ships no longer needed to round the Cape of Good Hope at the southern tip of Africa; fleets could depart from ports like London, England, or Marseille, France, and sail to the port of Mumbai, India, returning laden with gold, silk, and spices.

Darius I, the king of the Persian Empire, completed the final section of the Suez Canal in 500 BC. He erected a granite stele on one of the sections of the canal, inscribed with:

I am a Persian, I rose from Persia and conquered Egypt. I command the opening of this river, originating from the Nile and flowing into Egypt, ending at the Sea of ​​Gobi near Persia. Once this river is completed, Egyptian ships can sail directly to Persia, just as I have wished.

Cool, stylish, and awesome – that's the charm of the passageway.

The approval of a Bitcoin ETF will have an impact not just in the present, but on the next decade or so. Once the inflow and outflow of fiat currency is unimpeded, the rest is up to time.

By 2025, we might actually see Bitcoin worth over $100,000.

Bitcoin has gradually evolved into a symbol of social status , resembling a piece of Manhattan's landscape. People choose Bitcoin not because it's faster than other cryptocurrencies, but because it's expensive. Its high price stems from the core consensus it embodies within the entire crypto world, serving as a store of value and a status symbol in social relationships, making it highly sought after by everyone.

Bitcoin embodies your strength, your stability, your loyalty, and your faith. It's like your courtyard house in Beijing's Second Ring Road, your old villa on Hengshan Road in Shanghai, or your villa in Hong Kong's Mid-Levels. Its value is determined by the truly wealthy class with purchasing power , just like Berkshire Hathaway's Class A shares, which are worth as much as $530,000 each. Capital flocks to it, and its popularity remains undiminished. Retail investors find it incredibly difficult to even buy one share, so what?

Ten coins are enough to be called a marquis.

Price-anchored games

If someone doesn't understand how the price of a coin is pegged, they don't truly understand Bitcoin. Let me first talk about land, and then I'll get back to Bitcoin.

Everyone's played Monopoly, right? But I rarely see anyone truly grasp its essence. You need to understand that the Federal Reserve's role is similar to the bank in Monopoly; its goal isn't to win, but to provide enough funds to keep the game going .

For the Federal Reserve, the appropriate amount of assets is the one that best enables it to fulfill its duties. Monopoly is essentially a game of land speculation, with the core being the monopoly of resources. The game has only one winner; all other players are casualties. Victory comes not from competition, but from monopoly.

Question: Where does the revenue of a central empire come from?

The answer is no different from being a Monopoly player, except that:

• State-owned enterprises
• Publicly owned land
• Monopolistic financial system

For an authoritarian government, this game only concerns two things:

1) How to control the entire society using a top-down bureaucratic system;

2) How to sustain this bureaucratic system through land, taxation, and commissions from the financial system.

Countries all over the world are similar, with little difference between ancient and modern times, and between China and other countries. Take the Tang Dynasty as an example: the government implemented the equal-field system, all males born were allocated 80 mu of public land and another 20 mu of permanent land (private land). Men in their prime were required to cultivate the land, pay taxes, and perform labor service. Each year, a proportion of the harvest was handed over to the government, and upon death, the cultivated land was reclaimed. At the same time, the emperor also allowed local governments and yamen to possess land and funds for commercial purposes. This system eventually collapsed because land became increasingly concentrated in the hands of officials and nobles.

For example, during the reign of Emperor Gaozong of Tang, a man named Wang Fangyi possessed a large amount of land, amounting to several dozen hectares. By the time of Emperor Zhongzong, Princess Taiping owned vast tracts of land, spread across fertile regions. This land was rented to poor farmers, with the majority of the harvest going to powerful officials, and the government taking a further cut. Many people fled to the countryside to avoid forced labor. The government initially registered the names of these deserters, but later simply ordered them to pay taxes. They either sold their land and houses or transferred ownership to neighbors, repeating this cycle until there was nowhere left to escape.

What if you lose the game? Start another one.

Therefore, dynastic changes and peasant uprisings led to the redistribution of resources. The same principle applies in modern times. In East Asian countries, asset values ​​are largely tied to land. This is a game set by the government, with housing as the vehicle. The United States, on the other hand, emphasizes capital efficiency, so their national game is the stock market, and the purchasing power represented by the national 401(k) retirement fund acts as a reservoir.

These are all different price-anchored games, and countless similar copies are scattered around the world, such as Rolex watches, Hermès Birkin bags, Yu-Gi-Oh! cards, limited edition blind box figurines... and so on .

New York City, USA, is highly developed and has a high building density, right? Yet, it still has over 25,000 vacant and underutilized plots of land—a full 25,000 plots! (The lighter-colored areas in the image represent vacant land.) There's even a proposal to impose a 3.5% tax on these plots, which would generate an additional $429.9 million in revenue for the city.

Beijing, the most densely populated city in northern China, has an area of ​​16,000 square kilometers, but only 2,000 square kilometers are actually built-up, with a land development rate of only 12.5%, which is even more stingy than Hong Kong (25%).

Beijing could easily afford to build villas for every resident. Based on China's urban planning standard of 10,000 people per square kilometer, the city, once fully developed, could accommodate 160 million people. Given this, why haven't any of the local governments simply opened up construction sites to provide shelter for the poor and needy?

In this game, land is a means of production, and monopolists must maintain its scarcity to keep the game going. This is what price anchoring is. To win, you must understand Bitcoin's position in the crypto game. Bitcoin is like land; the only difference is that it doesn't have an absolute will. What keeps the entire system running is an algorithm and consensus.

In other words, it is virtually unbreakable. Bitcoin's biggest anchor is the consensus of its total supply of 21 million. We can easily divide Bitcoin holders into the "crypto-owning class" and those without Bitcoin into the "crypto-free class." With a global population of 8.045 billion, dividing these 21 million coins among everyone would only give each person 0.0026 BTC—far too many to go around.

You might question this, saying that all this talk of consensus is just empty rhetoric, and that you might as well quit and start afresh. In fact, countless people have thought the same thing in the past, and they've proven it wrong through their actions. The massive Bitcoin fork wave of the past few years was essentially setting up your own private server. And what's the result? These forked coins are now littered with corpses, a testament to the naive ideas of the past.

If consensus were so easily changed, then the world's richest people wouldn't need to stay in Manhattan; they could just buy a piece of wasteland in Ohio and build a new capital. But do you think that's realistic? Establishing a value coordinate system is a long process, and once it's built, it's not easily changed within a century.

Who stole your coins?

Some people clearly see the cheat codes to win, yet still get eliminated from this game quickly. Accumulating cryptocurrency is so simple, but for some, it's harder than climbing to heaven. Every game has its levels. In the past few cycles, those who orchestrate these schemes have consistently used various altcoin narratives. People say they love Bitcoin, but actually buy altcoins. This plays right into the hands of the big players, who obediently hand over their chips. You get worthless coins, he gets Bitcoin, and everyone calls each other idiots.

New public chains, platform tokens, forked coins, MemeCoin, storage, stablecoins… A closer look reveals they're all huge pitfalls. We shouldn't judge something by its performance over a few days or months. In a bull market, everything seems to rise and "outperform Bitcoin," but I ask you, excluding those KOLs who write short articles to scam money, how many have actually held altcoins long-term and achieved significant results? Over a yearly period, how many have truly outperformed Bitcoin? Don't listen to their hype.

In 2017, the narrative for public blockchains was to surpass Bitcoin; in 2021, it became to surpass Ethereum… The primary market is a PvP battle where everyone is exploiting each other, while the secondary market is full of fabricated stories to lure unsuspecting investors. Aside from Bitcoin, there are no truly decentralized crypto assets in this market. Buying any altcoin is like participating in an unequal game.

Web3 teams, especially anonymous teams, issuing tokens is fundamentally against human nature . When you can fork a project, modify the front-end, and reap huge profits, no one will stay committed for long . What's the initial motivation? The initial motivation is to make quick money.

Tokens can corrupt the mindset of a startup team . Traditional internet startups work tirelessly for years, raising Series A, B, and C funding rounds, cashing out some money at each round to improve their lives—that's perfectly understandable. But in the crypto world, the pace becomes: start trading and mining today, list on an exchange tomorrow, dump the tokens the day after, and leave, returning the project to the community. Expecting to find truly productive teams in this environment is like trying to pull gold out of a cesspool.

That's why I say this game is unequal. To win, you need strategy. Strategy has nothing to do with short-term profits or losses, nothing to do with the macroeconomy, and nothing to do with the pot size. A successful strategy depends on whether you make the right choices. Every time you buy cryptocurrency, you should repeatedly ask yourself:

• Should I participate in this game?
• How much should I bet?
• Was my entry point the best?
• Can I force my opponent to fold and be eliminated?

If you can make better decisions than your opponents, then your strategy is viable. Even if you don't win the biggest prize in this particular round, as long as you persist, your odds of winning will accumulate, eventually leading to great success. However, in my limited experience, there seems to be only one strategy with a positive expected value: accumulate coins in batches during bear markets and sell at the top during bull markets. Altcoins excel at misleading you into believing they are as enduring as Bitcoin, weaving narratives and lies until you genuinely believe it and obediently exchange your Bitcoin for other tokens that are worthless in the long run.

The Ethereum-Bitcoin exchange rate over the past year has been a perfect trap, with every red line leading to a pile of corpses. I have no doubt that a bull market will arrive someday and Ethereum will once again stand at a high level, but if you choose an asset over a 10-year cycle, you only have one choice in the entire crypto market: Bitcoin. As long as the crypto market continues to prosper, Bitcoin will not wither. If Bitcoin is ultimately proven false, then the entire crypto market will cease to exist.

Understanding the base position

To hold onto Bitcoin, you need to clearly understand the quality of your assets. Two main viewpoints:

1) Bitcoin is a safe-haven asset, and it is the first to rise during times of war.

2) The government protects the leeks (as individuals).

All of the above are wrong.

Bitcoin remains a risk asset to date and will likely retain that status for a long time . The massive liquidity injections through government money printing in 2020 and 2021 fueled a global asset bull market, and its speculative nature capitalized on this flood of fiat currency liquidity.

The government's goal has never been to protect the "leeks" (victims), but to ensure that every individual contributes enough tax revenue and provides the necessary labor value before being taken over by the system . The government is not a "person," but a machine that maintains the operation of the system by monopolizing resources within its jurisdiction.

The most important component of this machine was the paper money. In 1260, Khan Kublai Khan began issuing paper money. They used mulberry bark to make it. They extracted an extremely thin layer of white inner bark from between the wood and the rough outer bark of the mulberry tree. This inner bark, after processing, became something similar to what we now call paper, except its color was black. Once the paper was made, they would cut it into pieces of various sizes. Each piece of paper represented the solemnity of real gold and silver. Why? Because officials would sign their names and affix their seals to these pieces of paper.

Once everything was ready, the Khan's chosen official would take his jade seal, dip it in bright cinnabar, and then press it onto a piece of paper. The moment that vermilion seal appeared, the paper transformed into real gold and silver currency. Anyone who dared to counterfeit such paper money would be executed. Behind this paper money was the authority of the state. But state authority had a fatal weakness: it was unchecked.

Question: Who regulates the paper money issuance mechanism?

No.

After money became based on credit, its issuance depended entirely on the central bank's discretion, and even the debt ceiling could be adjusted at will. In my opinion, the word "ceiling" can be dropped; since it can be adjusted arbitrarily, what's the point of calling it a ceiling?

The complex theories and models woven by economists are merely attempts to convince us that central banks are subject to self-restraint in issuing paper money. However, a glance at the Federal Reserve's balance sheet reveals that since the era of credit-based monetary policy, this so-called restraint has been nothing more than empty rhetoric.

When resources are scarce, issuing paper money becomes a primary means of alleviating the problem. I remember when I was a child, a steamed bun cost only 25 cents, but now in Shenzhen, you need to pay 3 yuan or even more. The currency has already depreciated by 12 times. Since we can get used to a 12-fold increase in the price of a steamed bun, what's unacceptable about a further 12-fold depreciation of the currency in the future?

We've gradually become accustomed to the way we pay bills and receive salaries, and to the numbers on our bank balances and credit card statements. Only when the system crashes do we begin to consider the true value behind these numbers . In short, government money printing is borrowing time from everyone holding cash, hoping that future social productivity can repay this debt. Whether it can be done or not is not the concern of this administration.

Bitcoin acts as an anti-inflationary tool. Its essence is a substitute for fiat currency. Night is coming, and you shall begin your watch tonight, and rest until your death. Give your life and honor to the Night's Watch, for this night and all the nights to come.

Remember, hold onto your Bitcoin.