Let me ask you a question first. What is the biggest asset foam in the world now? Undoubtedly, it is a digital currency
Let me ask you a question first. What is the biggest asset foam in the world now? Undoubtedly, it is a digital currency. Some readers say that the foam of real estate is also very big, but real estate is backed by physical assets (houses), and digital currency is issued out of thin air, which many people call "air currency". The Hong Kong SAR government is now supportive of digital currencies, allowing investors to conduct digital currency transactions in Hong Kong and incorporating them into financial regulation. So how did the digital currency foam come into being? Will the future break down? This article takes Ethereum as an example to discuss in detail with everyone.
Firstly, correct the concept that Ethereum is not a digital currency, Ethereum is a platform, and the Ethereum issued by this platform is the digital currency. Bitcoin is a distributed ledger with the main function of accounting.Ethereum can be understood as a distributed computing platform that not only allows for accounting, but also allows programs to run on it.Bitcoin is like the big brother of the past, with only the function of making phone calls; Ethereum is like the old PHS phone, which can not only make phone calls, but also run some small games, such as Tetris.
A distributed computing platform indicates that Ethereum, like Bitcoin, is decentralized, with nodes distributed around the world jointly accounting and maintaining a ledger that is open, transparent, and tamperproof. But unlike Bitcoin, Ethereum provides a comprehensive scripting language, which means we can develop small programs on Ethereum.
These mini programs require the hosting and operation of nodes in the Ethereum network, and we also need nodes to account for transfers on Ethereum. Therefore, we need to pay for these node fees.In the Bitcoin network, the transaction fee for our transfer payment is Bitcoin, and the rewards given to miners by the system are also Bitcoin; In the Ethereum network, the transaction fees paid and the rewards given to nodes by the system are in Ethereum.
If Ethereum were just a distributed computer that could run programs on, it wouldn't be enough to make it "blockchain 2.0". The real killer of Ethereum is its smart contract function. What is a smart contract? Simply understood, a smart contract is a contract that can be automatically executed.
For example, if I join Company A and sign a "labor contract" in the form of a smart contract, my salary will be automatically paid at a fixed time per month. If Company A makes layoffs, the compensation will also be automatically paid in accordance with legal regulations, which means that Company A cannot save compensation by inducing me to voluntarily resign because smart contracts are automatically executed. We can see that Bitcoin only achieves the immutability of transaction records. With Ethereum's smart contract, it truly achieves "trustworthiness" and does not require third-party guarantees. Specifically, in the above cases, with smart contracts, labor disputes will no longer exist.
Having said so much above, it is actually expressing a viewpoint: digital currency is valuable, not just an "air currency". In fact, when we say that an asset has a foam, it means that the asset is not worth the price, not that the asset is worthless. In fact, the fact that digital currencies can exist for over a decade and generate prices of tens of thousands of dollars per asset indicates that global investors are optimistic about this asset.
A Bitcoin investor once said:The value of digital currency is unregulated, and the price of freedom is the price of digital currency.This viewpoint is not correct, and digital currencies are also regulated, such as not being used for illegal transactions. However, the popularity of this viewpoint indicates that there is a market for this form of asset. The fact that Hong Kong allows digital currency transactions also indicates this.
Finally, it must be noted that this article is an academic discussion and is not a recommendation to invest in digital currencies. In fact, digital currencies pose significant risks and theoretically can instantly return to zero, making them unsuitable for ordinary investors.
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