Today, a friend who has been hoarding Bitcoin for 6-7 years left me a message. He said: Is it possible that Ethereum is too useful, so its price growth is limited? Otherwise, it will limit its large-scale application and general use. Is it impossible to balance the contradiction between being too useful and being too expensive?

When he said this, I knew he was a master. He looked at things very dialectically and with clear logic. After careful consideration, I had to say that his logic was correct.

This article is not about making money, but purely about discussing issues from the perspective of value and the contradiction between value and development.

More than 2,000 years ago, Zhuangzi said: "Mountain trees are their own enemies; oil and fire burn themselves. Cinnamon can be eaten, so it is cut down; lacquer can be used, so it is cut down. Everyone knows the use of useful things, but no one knows the use of useless things. This shows the wisdom of the ancients."

This means that the trees on the mountain are cut down because they are useful, the oil is burned because it is useful, the cassia tree is cut down because it is edible, and the lacquer tree is cut because it is useful. Because they are all used by people, they cannot last long.

Everyone knows the use of useful things, but not the use of useless things.

There is a kind of tree in Zhuangzi's article. It cannot be used to make boats, windows or furniture, it cannot bear fruit, it cannot be eaten, and it is useless. However, it can survive in the world forever, just like Bitcoin, which has no other functions. It is slow in transaction payments, and the network for issuing coins is also slow. It cannot be used for various applications and can only be used as a store of value.

This kind of useless use is the greatest use.

Ethereum is very useful. It can issue coins, make payments, store data, do transactions, and make contracts. However, its long-term development is limited by its usefulness.

Why do you say that?

Because Ethereum is the largest platform in the blockchain world and the basic setting of the blockchain world, in order to make Ethereum valuable, Ethereum is empowered. Because of its value, many people are willing to invest in mining machines. Using applications on Ethereum also requires consuming Ethereum. The value of Ethereum is further enhanced.

From this perspective, Ethereum is the underlying resource of the blockchain world, just like one of the most important energy sources in the real world, just like the energy sources such as oil and electricity in the real world. We are sure that oil and electricity are very valuable because they can produce all kinds of things. Without these energy sources, all industries cannot develop. At this time, if the price of oil becomes too expensive because it is too valuable, the cost of production will be greatly increased. Then when the profit of development drops to only maintain, people may not need oil much because it is too expensive to use. What should we do? Then the price of oil must be lowered to maintain a balance. Because of this property, oil can never rise above the price of products at the production end. Because oil is too useful, it limits its own price.

Ethereum has now become the largest public blockchain, with hundreds of applications deployed on the Ethereum network. Each interaction consumes Ethereum. This is the fundamental reason for the surge in Ethereum prices. Well, there is no problem with this. If Ethereum rises to $50,000 a day, the price of using it may be $1-2 at today's price. If it rises to $50,000, then the price of using the Ethereum network may be 30-50 U per time.

Some people may say that how can Ethereum rise? If it is certain that it will not rise, then there is no possibility of long-term holding of Ethereum. Capital seeks long-term development to obtain profits. If it is certain that it cannot be obtained and there is no story, it will definitely be abandoned and go to zero. Whether it can rise or not has not come yet, let's not talk about it. If you look at it from the perspective of long-term holding, it must rise to be worth buying. For example, 10,000 US dollars is its end, which means that after 10,000 US dollars, the Ethereum network will have no development and no funds will enter. Will you buy after this certain end? Obviously not.

If the price of Ethereum rises to such a high level, it will inevitably limit its development, because you use it to make a profit, but if you use it once, the cost is too high and you lose money instead of making a profit, will anyone still use it? If no one uses it, then won’t Ethereum’s development be restricted?

The price of Ethereum is too high and people cannot afford to use it. The lack of use limits the increase in Ethereum's price. This is Ethereum's self-limitation.

So someone developed a second-layer network to greatly reduce gas fees, but it was not enough, because obtaining coins requires energy, so this cost must be reduced again, and then Shanghai was upgraded, but it still didn’t work. There were too many people using it, and Ethereum rose even higher, so the network fee would increase further, so Cancun had to be upgraded again.

What if one day the price of Ethereum keeps rising and people can no longer afford it? This is a very contradictory problem. If it maintains balance, it cannot rise. If it does not rise, no one will want it. If it rises, it cannot maintain balance. There is no solution.

Therefore, Ethereum's price is limited precisely because of its usefulness, while Bitcoin has no other uses. Its only use is that as long as legal currency is over-issued, its price will rise, and if legal currency is not over-issued, its price will not rise.

By the way, let me talk about platform coins. I will buy platform coins. They are big winners in every bull market, but this is purely for making money, there is no other reason. Platform coins are not quite like exchanges themselves. They are similar to company securities, but they are not securities at all.

We can analyze this problem briefly: For example, if you run an exchange, you own 50% of the shares of this exchange, and you make billions every year through the exchange. So do you think your 50% shares are more valuable, or your platform coins are more valuable? Obviously, exchange shares are not equal to platform coins. So will you maintain the value of your exchange shares first or the value of the platform coins first? You make billions, for example, if you are optimistic about the development of the exchange, will you buy the shares of the exchange first or the platform coins? If you buy the platform coins, then you can't buy your shares, and you will lose. But ordinary listed companies are different. Stocks represent the value of the company. Buying stocks is buying a company.

Exchanges must make money, and the capital of the company must prioritize the interests of its own shares. So what does it mean if the exchange's platform currency is worth more than the company's shares one day? If it were you, what would you do? This means that the value of your company's shares has decreased, and the money you have earned from the exchange you have worked hard to run is not as much as the platform currency. You will never allow this to happen. No matter how any exchange empowers its platform currency, it is impossible for them to use all the exchange's interests to repurchase the platform currency. They are only willing to use a portion of it, and their ultimate goal is to make their shares more valuable.

Obviously, the conclusion is that the real value of the exchange's platform currency is definitely not as good as the exchange itself. The exchange will never allow the value of the platform currency to exceed the exchange's shares. They all understand this, so we should also understand it. The exchange making money does not mean that we who hold the platform currency make money, but the platform currency making money can definitely represent the exchange itself making money. In addition, the platform currency is extremely fragile, especially when the industry market is not good and when the exchange makes mistakes, both of which often happen, so the fragility of the platform currency is self-evident.

Here we must say that the interests of the company Uniswap are all in the platform currency, that is, all in Uni itself, and Uni's current price represents its fully priced value, so if we simply value it based on trading volume. If Uniswap's trading volume exceeds that of OK and Huohuozhima, for example, can we conclude that the value of OK Huohuozhima's platform currency should not exceed Uni's market value? It is clear at a glance which is higher and which is lower.

The uselessness of uni is fully demonstrated here, but I don’t know when it will be of great use. Anyway, I can wait.

From the perspective of making money, no matter how restrictive and fragile Ethereum and platform coins are, big money will still be made in a bull market. So as mentioned at the beginning of the article, this is not a discussion about the value of making money, but about the pure value itself.

I have finished writing, keep it up. I am the inspirational brother of Circle B, an old investor who only speaks the truth in the cryptocurrency circle.