Bitcoin’s price drop may be due to consensus changes。From its invention in 2009, Bitcoin rose to $69,000 in the 11 years to 2021. The reason for the increase is on the one hand because the mining output is halved every four years; on the other hand, because more and more people know and agree with the concept of Bitcoin decentralization. Every time the price of bitcoin rises and falls behind, there will be a group of new people who understand and agree with the concept of bitcoin. This has led to a growing consensus on Bitcoin and decentralization, and more people participating in Bitcoin and other cryptocurrencies, gradually pushing up the price of Bitcoin. From 2020 to 2021, after rising to $69,000, Bitcoin has been widely recognized, and the number of people participating in Bitcoin transactions has also reached a peak. At this time, the sharp rise and fall of Bitcoin prices can no longer attract more attention. At the same time, two factors have profoundly affected the consensus on Bitcoin and cryptocurrencies.
1.Bitcoin is centrally held. Few people hold more than 1 bitcoin, and as the price rises, most people can't afford bitcoin. This leads to doubts about bitcoin: So expensive and hard to come by, does it really have real value? People who hold little or no bitcoins will answer this question based on their own interests, tend to think that they do not, and will not buy bitcoins; people with many bitcoins will say yes, but they will wait for the bitcoin they already have to appreciate rather than buy bitcoin at a higher price. Therefore, Bitcoin lacks the momentum to rise. When the driving force of price increases is exhausted, price drop is inevitable.
2.It is obvious that in the more than ten years since Satoshi Nakamoto invented Bitcoin, although there have been many innovations in the field of cryptocurrency, there is a lack of practical applications that can break through the field of cryptocurrency and penetrate into daily life on a large scale. Aside from the huge increase in transaction prices, ordinary people outside the cryptocurrency space rarely feel that Bitcoin and cryptocurrencies have changed their actual lives. In other words, Bitcoin still relies on the innovation of Satoshi Nakamoto, and its achievements and practical significance have not been widely used and recognized. Doubts and shakes of Bitcoin are thus generated. If the doubts about the real value of Bitcoin cannot be eliminated and the consensus on the value of Bitcoin cannot be generated, then the decline in the price of Bitcoin will not end. This Bitcoin price drop is the first time in Bitcoin’s history that the price has dropped along with a consensus decline. Although it has fallen by more than 70%, it has experienced more severe declines in the past decade or so. But this price drop is still unusual. In the past, every time the price of Bitcoin fell, it was accompanied by a rise in value consensus. This time it was the opposite. Although the Bitcoin price drop was suspended at around $20,000, there is no sign of a consensus on the value of bitcoin. As a result, the price of Bitcoin may fall again, and may not return above $20,000 until consensus is restored.
It has been more than ten years since Bitcoin was invented. Bitcoin needs to be practically used and needs to be developed and innovated, otherwise it will also be abandoned by the times. I wrote an article: "Consensus, Risks and Benefits:Ledger-BasedDecentralized Organizations", which describes a scenario in which Bitcoin is used in real life, and accounts are recorded during use,In the consensus ledger, the ledger is continuously updated with the consensus, and risks and benefits are spread to each row of the ledger. When the consensus, risks and benefits recorded in the books are balanced, multiple decentralized and seemingly fragmented activities will form a flexible, efficient and powerful overall activity.
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