1. The difference between Bitcoin, real estate and gold in value preservation



1. Bitcoin

01. Scarcity and decentralization: The limited total supply of Bitcoin makes it scarce, which may increase its value. At the same time, the decentralized nature of Bitcoin determines that no central agency or government can control the value of Bitcoin, which increases the trust of some investors in it.

02. High potential rate of return: The Bitcoin market has a high volatility, which may bring higher potential rates of return, but also comes with higher risks.

03. High Volatility: The Bitcoin market is very volatile and prices may fluctuate significantly, which means that investors may receive high returns, but this is also accompanied by higher risks.

4. Digital characteristics: Bitcoin is a completely digital asset that can be easily stored and transferred. In times of war, the digital nature of Bitcoin may make it more convenient and flexible.

2. Real estate

01. Real assets: Real estate is a real asset with a stable value that usually increases over time. Real estate investors usually view it as a long-term, stable asset.

02. Stable income: If you rent out your property, you can get stable rental income, which helps to protect against inflation and market fluctuations.

03. Changes in demand: However, during times of war, the real estate market may be affected on both the demand and supply sides, especially in areas affected by the war.

3. Gold

01. Historical record of value preservation: Gold, as a precious metal, has a long historical record and usually performs better during times of economic turmoil or inflation.

02. Physical nature: Gold is a physical asset with real value and will not lose its value due to technical failures or network problems.

All things considered, gold and Bitcoin are often viewed as better-preserving asset choices during times of war, with Bitcoin potentially offering higher potential returns, but also coming with higher risks and volatility.

We live in a highly digital world, but most people still use physical goods to store value. The most frequently used means of storing value in the world is real estate. According to data, real estate accounts for about 67% of global wealth. However, the recent macroeconomic and geopolitical headwinds have highlighted the weakness of real estate as a tool for storing physical value. What if a war breaks out? As a means of preserving value, what should we do if the house is destroyed?

While taking long-term wealth management seriously, it is important to consider worst-case scenarios and potential global impacts.

2. War and the Destruction of Wealth



At the beginning of the 21st century, war has never been more devastating to humanity than it is today. Last year, more than 238,000 people died in conflicts. Syria, Sudan, Ukraine, Palestine, Israel and Lebanon - the sources of conflict are growing larger and larger around the world. Some areas have been devastated on a massive scale. There is no property left, and the value stored in that property has virtually evaporated. It is difficult to imagine the economic setbacks that people have endured in addition to the suffering and grief caused by war.

Despite some exceptions, such as Japan, real estate is used as a store of value around the world. The fruits of the labor of millions, even billions, are threatened by the growing threat of destruction. In addition to factors such as inflation and taxation, the damage to material wealth has always been the most serious threat to prosperity as a whole. As early as ancient times, armies have ruthlessly plundered cities and destroyed the property of residents.

3. Physical and digital value storage



1. Digitalization

Digitalization optimizes almost all of the functions of storing value. Bitcoin is more scarce, more accessible, cheaper to maintain, more liquid, and most importantly, it allows you to transfer your wealth in times of crisis.

Bitcoin is wealth that is truly yours. With the threat of war looming around the world, I believe it is better to hold wealth in digital assets like Bitcoin rather than physical assets like real estate, gold, or art, which can be easily taxed, destroyed, or confiscated.

2. Confiscation of property

If we look back at history, it’s clear that physical stores of value make people vulnerable to excessive government intervention. One historical example is the dispossession of the Jews by Nazi Germany. Unfortunately, these repressions are not isolated in history. They happen all the time. As Michael Thaler likes to point out, many people lost their property in Cuba when Fidel Castro came to power.

These painful historical lessons underscore the importance of protecting wealth in digital assets like Bitcoin, which has proven challenging to confiscate, tax or destroy and is easy to transfer.

4. Macroeconomic Changes



In addition, changes in the macroeconomic landscape may also cause a rapid depreciation of real estate. Generally, real estate is purchased with loans. Therefore, when interest rates increase, the affordability of financing will decrease and demand will decrease, which will eventually lead to a drop in real estate prices. We will find that this situation is currently happening in countries around the world. The combination of rising interest rates and reduced demand has caused the value of real estate to fall around the world.



Bitcoin follows a deflationary model, meaning that its supply decreases over time until it reaches a hard limit in 2140. Every four years, the Bitcoin block reward is halved (Block unicorn note: for example, now the miner packs a block reward of 10 yuan, and since the Bitcoin reward is halved after four years, the miner will only get 5 yuan).

The upcoming halving on Friday, April 19, 2024 is expected to cut the block reward in half from 6.25 bitcoins to 3.125 bitcoins, meaning 450 bitcoins will be issued per day instead of 900.

Currently, Bitcoin's annual inflation rate is about 1.8%, but it is expected to drop to 0.9% after the next halving. From then on, inflation will be almost negligible. In addition, Bitcoin has suffered huge losses, and it can be expected that Bitcoin will also suffer large losses in the future. The finite supply is constantly decreasing, which increases the deflationary pressure on the Bitcoin network. As more people (and machines) use Bitcoin, the increase in demand is offset by the decrease in supply.

This extraordinarily violent deflationary movement is not observable in the real estate sector. Although real estate is scarce due to the limited supply of building land, there is no hard cap on the amount of land that can be developed for new buildings and zoning laws that allow for a higher floor.

5. Bitcoin is absolutely scarce



For most people, it is difficult to imagine what a fixed supply would do to an asset’s price. Before Bitcoin, there was no concept of a truly scarce commodity. Even gold has an elastic supply. Growing demand drives mining to become more intensive, and this flexibility is not suitable for Bitcoin.

So every halving event means a decrease in supply, and the price of Bitcoin will rise and continue. This permanent development can exist for a long time as long as there is corresponding demand, and the reason may be due to the special monetary properties of Bitcoin.

This dynamic is expected to continue even against the backdrop of a global economic crisis. The supply of Bitcoin will continue to decline, and the price will most likely continue to rise. As we have explained, this is because of the expected continued demand in times of crisis. Even inflation can have a positive impact on the price of Bitcoin, as it increases the supply of Bitcoin fiat money.



Therefore, war itself is not enough to cause huge fluctuations in the Bitcoin market technically. More factors lie in the market itself.

Bitcoin has always been regarded as "digital gold" and "safe-haven asset" by people in the currency circle. Bitcoin does have some properties of gold: it is formed based on consensus, and this consensus transcends national borders; it is decentralized and decentralized, and there is no issuing agency. It is precisely because of these characteristics that many people believe that Bitcoin has the characteristics of a safe haven that transcends countries, and regard it as a financial safe-haven asset that can be used as a hedge against global economic uncertainty and price increases. The rise of Bitcoin during the global epidemic seems to have also shown this characteristic of itself, further confirming this view.

But is it really so?

During the pandemic, countries injected a large amount of liquidity to fight the epidemic and save their economies, leading to a global asset bull market. In 2020, a large amount of US institutional funds flowed into cryptocurrencies, and the price trend of the currency was highly correlated with the US financial market and technology stocks. From this perspective, the bull market of Bitcoin during the pandemic was not due to the market's risk aversion to the epidemic, but on the contrary, it was because its speculative nature catered to the flood of liquidity during the pandemic.

The price is artificially high, so it will naturally fall back. As the world economy gradually recovers from the epidemic, countries begin to shrink liquidity, and Bitcoin also shows a downward trend. At the beginning of 2022, Bitcoin continued the downward trend at the end of last year and was in a slump. After entering February 2022, Bitcoin slowly rebounded to US$46,000, and then continued to decline, with a monthly fluctuation of more than 30%. Therefore, from this period of time, Bitcoin is still in a correction stage.

During the period of Bitcoin's callback, the Ukrainian crisis intensified, geopolitical tensions, and the outbreak of war created panic. This panic not only pushed Bitcoin, the stock market and other markets to continue to fall, but also pushed the traditional safe-haven asset gold to soar, breaking through the highest level since the beginning of 2021. Crude oil, grains and other sectors are also rising. It can be seen that the market panic did not regard Bitcoin as a safe-haven asset.



Although emotions are subjective, they have their own objective factual and logical basis.

Bitcoin is not so suitable for risky transactions. In the blockchain, the block will package and broadcast the transaction data during this period. If a 1MB block is generated every ten minutes, and each transaction requires 250B to store data, then 1MB can only store 4194 transaction data (Transaction), that is, 4194 transactions are processed in 10 minutes, and a maximum of 7 transactions are processed in one second. Obviously, this speed cannot meet the normal transaction needs of the world. When the number of transactions in the entire Bitcoin network is too large, the block capacity is close to the upper limit, and the Bitcoin network is congested, Bitcoin transactions will slow down. This slow transaction actually pushes up the transaction cost - time. The long transaction time makes it impossible to conduct small transactions - when you are escaping, you can't wait for 1 hour to refuel; you can't wait for an hour to exchange currency. But gold is more divisible, and simple measurement tools can support transactions from hundreds of yuan to tens of thousands of yuan. The ancients did a good job in this, which has been proven by human history.

More importantly, Bitcoin's risk aversion stems from its decentralized nature, which can hinder regulation and make it stronger. Therefore, it has a nature that transcends the state, so it has risk aversion. However, to some extent, Bitcoin is still centralized.

Social media is free, highly mobile, very convenient, fast, and can be received and read on almost any device with a screen and network connection. More importantly, everyone is an audience and a disseminator, and its essence is a decentralized and unorganized communication channel. This approach has indeed brought new situations to global politics. However, the decentralization and deorganization of social media are based on the Internet hardware lines. Due to the huge investment in Internet infrastructure lines, they are often controlled by large companies or governments, and are operated and managed in a centralized and organized form. It is a controllable hardware network. So, in this sense, social media is still controllable.

The same is true for Bitcoin. Although it appears to be decentralized, when regulation affects the centralized Internet, Bitcoin will also be affected. This characteristic reduces the robustness of Bitcoin when real risks come. The so-called robustness means being strong and strong, and refers to the ability of a system to survive in abnormal and dangerous situations. For example, whether a computer system can operate in the event of disk failure, collision, network overload, or attack is the robustness of the system.

Some misunderstandings about Bitcoin will gradually emerge. The long-promoted "digital gold" hedging tool and "decentralization" and other characteristics will be re-recognized. As one thing grows and the other declines, the high speculation, high volatility, and high risk characteristics of Bitcoin will be highlighted, and eventually, it will become a high-risk, high-volatility speculative target.

However, with the emergence of new technologies, decentralized, completely out-of-control and non-closed hardware networks are no longer a fantasy in science fiction. For example, mobile phones are no longer just terminals connected to routers and operators, but become nodes of the entire network. Only then can blockchain be truly decentralized in terms of hardware.

Of course, it is also conceivable that the transaction speed is still slow, but at least it is truly decentralized, and at this time the blockchain currency will be repositioned. However, this completely decentralized hardware communication network will not only change the face of cryptocurrency, but also change the world.

Finally, I hope that more people can realize the benefits of Bitcoin, which can both preserve wealth and protect livelihoods in extreme situations.

Finally, follow your cousin and he will help you buy the next 100-fold track.