Since the advent of cryptocurrency, there has been constant controversy and tenacious vitality. On the one hand, Old Money investors represented by Buffett sneered at cryptocurrency, thinking that "cryptocurrency is an illusion"; on the other hand, cryptocurrency is considered to be "the greatest invention of the 21st century". After many rounds of bullish and bearish ups and downs, the cryptocurrency is still developing strongly. Why does cloud mining for cryptocurrency work?
This makes many novice cryptocurrency investors question: What is the value of cryptocurrency? Is cryptocurrency worth cloud mining? Facts speak louder than words.
The return on investment in cryptocurrency far exceeds other assets
Statistics from Trading View: The total market value of cryptocurrencies has risen from USD 6.617 million on March 1, 2014, to USD 1.18 trillion as of today (July 22, 2021). The compound growth rate was 462.57%. Although not all currencies calculated in the total market value have investment value. But at least it can be seen: the prosperity of cloud mining for the cryptocurrency industry. And even if you follow the simplest investment strategy of buying coins to buy the leader, buy Bitcoin and Ethereum. The return on investment is also amazing!
The price of Bitcoin 10 years ago (July 22, 2011) was $14.7. As of today (July 22, 2021), the price of Bitcoin has soared to $31,000. The compound annual growth rate is 116.35%. Ethereum was launched by crowdfunding in July 2014, and the initial currency price was only about $0.4. By this year, the price of Ethereum has been $1,837. The 7-year compound growth rate was 233.54%.
The global safe-haven asset-gold, 10 years ago, the price of gold was US$1,500; today, the price of gold is US$1,800; the 10-year compound growth rate is only 1.84%. Because of the new crown pneumonia epidemic, the price of gold rose the most fiercely last year, with a year-on-year increase of only 25%. Some people even calculated that the return on investment of major global assets in the past 10 years:
Bitcoin has ranked first in return on investment for 8 years in 10 years, leading the world, and its gains have crushed other assets.
Only when it comes to retracements, Bitcoin will be slightly inferior. The asset with the smallest annual retracement of investment in the past 10 years is: the Nasdaq 100 index, only in 2018 there was a 0.1% retracement. All other years of investment are positive returns. But the retracement of the Nasdaq 100 index, which performed so well, has a compound annual growth rate of only 20%. Bitcoin and Ethereum are 5 times and 10 times higher.
Institutions' participation include mining for cryptocurrency is becoming increasingly enthusiastic
Institutions are the most rigorous, smartest, most researching, largest, and most authoritative investors in the market. It is not only the vane of the investment market but their own formal and licensed investments will make cloud mining for cryptocurrency more mainstream. The more accepted by the mainstream, the greater the investment potential of this industry.
The world's largest licensed institution that invests in digital currencies is Grayscale Investment.
This company was established by the Cryptocurrency Investment Group in 2013. In 2015, its Grayscale Investment Trust (GBTC) was listed and traded on the OTC market, and the primary and secondary markets were opened up. In 2018, the Grayscale Bitcoin Fund (GBTC) was approved by the U.S. Financial Industry Regulatory Authority and became the first Bitcoin fund to report to the SEC. At present, Grayscale Fund not only includes Grayscale Bitcoin Trust, but also BCH Trust, ETH Trust, ETC Trust, ZEN Trust, LTC Trust, XLM Trust, and ZEC Trust Fund, etc. The total holdings have reached 25.92 billion US dollars. And holding cloud mining for cryptocurrency institutions through Grayscale Trust Fund, that's even more. According to data from the SEC's official website on June 30, more than 20 institutions are holding Bitcoin through Grayscale Trust Fund alone.
In addition to Grayscale Funds, institutions investing in digital currencies include Blockone, MassMutual, MicroStrategy Inc., Square Inc., and so on. Blockone originated from the investment in cloud mining for cryptocurrency. Let this company's shares repurchase in less than 3 years, the earliest investors brought a return of 6567%. It is reported that Block. one already holds more than 140,000 bitcoins, making it one of the largest holders of original digital currencies. MassMutual, the world's top financial services organization, announced in December 2020 that it had purchased $100 million in bitcoin for its ordinary investment account. At the same time, the company also purchased $5 million in equity in the New York Digital Investment Group (NYDIG). As of February 2021, the company has managed $4 billion in digital assets.
Not only traditional financial institutions but also non-financial institution companies, such as software company MicroStrategy Inc. As of March 2021, this company has spent a total of 2.1 billion US dollars in bitcoin. In June of this year, it also stated that it would raise funds through the issuance of US$400 million in bonds to purchase Bitcoin. Needless to say, Musk, known as the "king of goods", not only bought 1.5 billion bitcoins himself but also often called out "Dogecoin" for goods. As a result, the price of Dogecoin has soared in the past year.
The return on investment far exceeding other assets, and the active participation of institutions, are proving the investment value of digital currencies. These large global companies with regular investment and strong strength have begun to pay attention to and actively purchase digital currencies. So why does cloud mining for cryptocurrency have investment value?
The high-quality characteristics of cryptocurrency are facing a huge market demand.
Blockchain is the cryptocurrency of the underlying technology. It has many excellent characteristics: including complete digitization, complete Internetization, complete privatization, high severability, security and simplicity based on mathematics and cryptography, and decentralization, High degree of transparency and scarcity, extremely low cost, no borders, zero thresholds, fairness, unforgeability, non-tamperable modification, anonymity, constancy of the issuance of some digital currencies, etc. Based on these characteristics, cloud mining for cryptocurrency has at least the following functions:
- Anti-inflation and value storage. The strongest value storage investment attribute is cloud mining for cryptocurrency representative-Bitcoin. After analyzing Bitcoin's 10-year bull and bear trend, one rule that must be drawn is: every round of Bitcoin's bull market is closely related to the global financial crisis, economic crisis, and currency inflation that have led to the looting of people’s wealth. Great correlation. The 2008 global financial crisis led to the birth of Bitcoin. In response to the financial crisis, the United States has thrown out a huge amount of monetary easing. From the end of 2008 to October 2014, the Fed issued three rounds of quantitative easing policies, with a total scale of US$3.9 trillion. In the 2013 bull market, Cyprus experienced a debt crisis; in the 2016 bull market, Brexit, and the US election, political and economic factors were uncertain; in the same year, India announced the abolition of banknotes with denominations of 500 rupees and 1,000 rupees, and 86% of the wealth in the hands of the people was directly looted. In 2020, the bull market, the new crown pneumonia epidemic, and the global economic crisis have triggered a huge amount of monetary easing in countries around the world. That is, no matter how individuals struggle, they face every round of monetary easing by the government. Wealth will be diluted by a huge amount. The market needs a decentralized, open and transparent, constant total amount, without any third-party endorsement, that can solve the trust problem and resist inflation.
With these excellent characteristics, the formation of high-scarcity, high-storage Bitcoin, the global consensus has deepened, and more and more institutions participate in the market, the supply exceeds demand, and the price has become higher and higher. Even traditional financial institutions such as JPMorgan Chase have stated that as millennials gradually become a more important part of the investment market, and they prefer "digital gold" to traditional gold, Bitcoin may surpass gold.
2) Fast settlement and safe payment. The universal feature of cloud mining for cryptocurrency is: replacing third-party credit with algorithmic credit, which not only improves payment efficiency and reduces payment costs, but also greatly reduces the exchange rate risk and friction loss of currency exchange, and prevents the settlement process from passing. Credit risk caused by more. This is a huge market demand for global trade, cross-border settlement, and seeking a unified, efficient, and barrier-free settlement system. Although no cryptocurrency can fully realize a one-second settlement and reach a global consensus, this must be an important direction for the development of cloud mining for cryptocurrency.
- Automatic execution and reduction of breach of contract. The blockchain smart contract, the underlying technology of cloud mining for cryptocurrency, has the value of automatic execution and reduction of default. Traditional contracts are based on probability, and blockchain-based smart contract technology has certainty. Once put on the blockchain, the smart contract will be executed strictly by the code. Smart contracts can use a decentralized network architecture to automatically execute contract back-end processes, including custody, maintenance, triggering, and settlement; they have a high degree of autonomy and cannot bribe middlemen or attack them. The certainty determines the Payment guarantee during the transaction. A currency whose technology has use-value must-have investment value.
In addition, digital currencies based on blockchain technology can also be used in multiple demand scenarios such as asset intelligence and tokenization. These are the value dependencies that digital currencies are optimistic about. Therefore, in many viewpoints, the cost is used to determine value, and the consensus is used to achieve value. It is more appropriate and reliable to use demand to determine value.
Of course, not all cryptocurrencies have value, let alone investment. In the actual cloud mining for cryptocurrency investment pragmatism, many investors have suffered a lot of losses because of Aircoin. Therefore, in the extremely valuable and potential investment field of cryptocurrency, specific currencies and specific analyses are also needed. Only by establishing a value investment system that is logically self-consistent, risk-bearing, and has a wide margin of safety can profit in the field of cloud mining for cryptocurrency.