Risk has two implications. The first meaning is the possibility of bad things happening. The second meaning is the consequences after bad things happen. For investment, the difference is the probability of loss and the amount of loss. Murphy's law tells us that if something bad is possible, it will happen sooner or later. Therefore, for investment, losses are bound to occur within a local time and space, and must be tolerated and faced. It's the normal state that it will fall when it is bought, and it will rise when it is sold.
So there are so-called risk control technologies. Professional institutions have specialized departments and complex mathematical formulas to perform fine calculations. For independent investors, there are actually two points. First, the most important risk control is to strictly control the total amount of investment funds, and always only invest no more than the amount of funds that you can afford to lose completely. As the saying goes, it is to invest only the spare money that is lost and does not affect your life. The second is to carefully choose the investment target, and only choose the currency whose profit probability and rate of return continue to increase with the extension of currency holding time. Don't participate in short-term silly games where the game "runs fast". The higher the degree of decentralization and the better the fundamentals of a project, the more likely it is to meet the second requirement. Such as Bitcoin.
However, the prerequisite for the second point of risk control to be effective is that the first point is in place. If the first point is not in place, you will not be able to extend the currency holding time indefinitely to obtain a continuous increase in your winning rate. When you are forced to play in a locally limited time and space, your winning percentage is greatly reduced. For example, if you invest a sum of money at the beginning of 2018, and you have to withdraw this money at the end of 2018, then you will definitely lose money and leave. If you do not insist on today in 2021, you will not be able to get the benefits of the extension of time and space.
The most important thing in any investment decision is to control risk. Using high risks to gain high returns is not proud of it, but to bear low risks to obtain high returns is the direction of our efforts. The gentleman does not stand under the dangerous wall, restrains the FOMO mentality, never "all in", always maintains a calm and easy capital allocation, always prepares for the worst case, and upholds Satoshi Nakamoto's "trustless" thinking and The spirit of the blockchain, don’t simply believe anything anyone says, insist on independent thinking and independent judgment, listen less or don’t listen to the instigation of the so-called authoritative bigwigs, watch more and act less, firmly hold Bitcoin, absolutely Don't use bitcoin to invest in other projects, only use incremental funds to invest, never sell bitcoin to invest in other projects, and keep the amount of investment funds in other projects not exceeding a certain percentage (such as 10%) of the bitcoin position. Now it is a bull market. The bull market is the best time to lose Bitcoin. In particular, it is necessary to abide by investment discipline and do a good job in risk control.
Today we continue to review the "Bitcoin Principles" audio class ("Liu Jiao Lian" official account menu can be found in the catalog and listen to the entrance) Chapter 7 "Half Issuance Has a Maximum Transaction Fee Paying Salary" Section 1 "Design Currency Issuance Parameters" ". (Review Note 07-1)
Currency is a pure to extreme thing. However, all commodity currencies before the advent of Bitcoin could not get rid of the shackles of material use value. Even gold still has specific uses in the electronics industry, and the de-anchored legal currency is gaining While the number is pure, it also loses the constrainability of the total amount and falls into a cycle of constant over-issue. Only Bitcoin has pushed currency to a pure digital form without any practical value, and at the same time has the ability to decentralize the total amount of restraint. It is the top form of monetizable that has appeared in human history so far.
The Bitcoin elephant is intangible and has no entity. It is a set of agreement definitions of consensus on the ideal currency that exists in everyone's mind. The key to this protocol is a set of parameters. Bitcoin with such parameters is the Bitcoin in people's minds. This set of parameters includes:
The total supply is limited to approximately 21 million BTC. Actually 2,100 trillion Satoshis. BTC and Satoshi are just units given by people, and only exist in people's subjectivity, not in the Bitcoin system. On the Bitcoin ledger, it's just numbers. Why is 21 million? Presumably, it is because considering the precision of computer floating-point numbers, in order to not need to encode larger numbers, 2100 trillion is a more appropriate size.
At the same time, Bitcoin was not minted by Satoshi Nakamoto in advance and then slowly distributed to everyone. Instead, miners all over the world perform distributed calculations, that is, mining, slowly digging out over a period of more than 130 years. Miners can dig out a block every 10 minutes. The first block can mint 50 bitcoins. Every 210,000 blocks is about 4 years. It will be halved once every block is 25 bitcoins. Then It will be halved in another 4 years, so that it will continue to halve, and eventually it will be close to zero. In this way, it decays in the form of a proportional series. Starting from the launch of Bitcoin in 2009, it will decay to zero by 2140, which is more than 130 years. Such a long time is enough to pass through two Kondratiev cycles, the longest economic long-wave cycle in human society, allowing Bitcoin to be tested in historical occasions and economic fluctuations, and gradually captured people’s hearts. This is Satoshi Nakamoto’s Foresight.
It takes 10 minutes to mine a block, that is, the interval between two blocks is about 10 minutes. Why is it so long? Because Bitcoin is a decentralized system, nodes are scattered all over the world. Considering the size of Bitcoin blocks and the transmission speed of the Internet, 10 minutes can ensure that new blocks can be spread to all corners of the world in enough time, so that everyone can Get the latest data. If it is too long, it will be slow; if it is too short, it will be easy to fork and reduce network security.
Since the decentralized network enters and exits at will, anyone can come in and mine at will, or exit at any time. That is to say, the computing power of the entire network fluctuates, so how to deal with the impact of fluctuations and ensure the speed of block production? Satoshi Nakamoto geniusly introduced a mining difficulty adjustment to the Bitcoin network. Surprisingly, the difficulty adjustment cycle is 2016 blocks, which is about 2 weeks. It is not a number such as the power of 2 common to computers. Why is it 2 weeks? My guess is that this parameter is friendly to miners, not to computers. Miners must have a cycle to plan and arrange their mining machine procurement and deployment plans, and it is more reasonable to configure this parameter with a human society's actual production activity cycle.
In short, Satoshi Nakamoto has designed the parameters of Bitcoin just right, which meets most people's expectations. The success of Bitcoin in the past ten years has verified the Produce-Market Fit (product-market fit) of this design. .