The financial circle is being slapped in the face by Bitcoin, while we are being slapped in the face by Dogecoin

This article is from the Plain Language Blockchain, author: Master Wuhuo Qiu.

Recently, I came across a Weibo post that left me quite emotional. The content was basically a well-known figure in the research community angrily criticizing Bitcoin, saying they just couldn't understand what value mining Bitcoin had, as it neither creates jobs nor generates tangible value, and it wastes a lot of electricity…

Then, due to mining, graphics cards and hard drives are out of stock everywhere, making it difficult for them to build machines, similar to how the housing market is affected by speculators driving up prices, leaving everyone without a home. This led to a barrage of criticism directed at the cryptocurrency and mining circles.

A prominent figure in the community responded that mining Bitcoin creates monetary freedom, and the value of monetary freedom can be seen in how high housing prices are now; this is just one of the negative consequences of unanchored money printing. Monetary freedom is far greater than just playing a game or doing some calculations.

They also casually pointed out that the shortage of graphics cards and hard drives has nothing to do with Bitcoin. One is ETH, and the other is the recently popular Chia. They suggested that the well-known figure should learn more to avoid making a fool of themselves.

You see, as Bitcoin has reached today’s level, in an environment where almost everyone knows about it, and various institutions, pension funds, and even small countries' organizations are starting to allocate resources to it, alongside the successful listing of Coinbase, the cognitive gap between insiders and outsiders remains enormous.

In simple terms, Bitcoin over the past few years has been continuously slapping the faces of outsiders, especially those financial elites in traditional finance who advocate "cash flow or value investing." Until they are brought into the fold.

Recently, however, those of us in the community who advocate "value investing" have been slapped in the face by Dogecoin (DOGE). So this article will discuss the fundamental changes of BTC and DOGE over the past year and see how these faces have been slapped.

1. Changes in Bitcoin's Fundamentals

For those who are still pessimistic, unable to understand, and claim that BTC has no value and no fundamentals, the following fundamental facts cannot be ignored:

1. Institutions

Over the past year, Grayscale has significantly increased its holdings in Bitcoin and other cryptocurrencies. Grayscale's clients are mostly institutions and "qualified investors," commonly referred to as "high-net-worth individuals," which simply means wealthy people! These folks are continuously buying, and Grayscale's trust design has basically no selling pressure on the BTC spot market, equivalent to long-term locked positions.

Moreover, various pension funds, which are responsible for managing the retirement money of the workforce in mainstream Western society, are increasingly stepping into this field, allocating part of their funds that were previously only invested in stocks, funds, and government bonds to Bitcoin.

This trend is still continuing to grow.

2. Companies

There's no need to elaborate on the richest person's orders; companies are directly investing $1.5 billion in Bitcoin. Even more astonishing is that Tesla's North American users can now directly buy cars with BTC.

But there are even more aggressive companies than the richest person, such as MicroStrategy, which has been buying Bitcoin in large quantities since July last year, continuing to buy at higher prices in December, earning more net profit in five months than in the past five years, with its stock price soaring.

A few days ago, Time magazine announced it would accept some Bitcoin payments and publicly stated that, like Tesla, it would not immediately convert the received cryptocurrency into fiat currency.

In the future, you will definitely see more and more similar companies adding Bitcoin to their balance sheets…

3. Halving

This is well-known; from past cycles, every halving means a significant reduction in Bitcoin's supply.

At the same time, as time passes, more and more people are becoming aware of Bitcoin, leading to an increasing demand. The past two halvings have generally initiated bull markets within a few months after the halving, and the third halving in May last year was no exception.

So, for friends who have been bearish or even shorting BTC since last year, it’s really hard to understand. Have they not learned from the past two halvings?

4. Coinbase

This year's listing of Coinbase is undoubtedly a milestone event in the cryptocurrency space.

Looking back, trading or mining was heavily suppressed, and cryptocurrencies were always associated with the dark web, gambling, drugs, and money laundering. People were afraid to tell their relatives and friends about trading cryptocurrencies, fearing they would think they were involved in something shady.

Now the largest trading platform is listed on Nasdaq; can you believe it? Doesn’t this also mean that ETFs are not far away?

On April 15, the entire cryptocurrency community was sharing co-founder Fred's shout-out to Satoshi:

Thank you Satoshi, whoever you are.

5. Monetary Easing

The largest scale of monetary easing in history—will it bring about the largest bull market in history?

In the context of global monetary easing, gold is rising, stocks are rising, commodities are rising, housing prices are rising, and prices are rising, and among all anti-inflation tools, Bitcoin has performed the best.

Is this a result of the market voting with its feet?

As that well-known figure said, Bitcoin brings the concept of monetary freedom corresponding to unlimited money printing, a concept that has been taking root in the minds of more and more people over the past decade.

When this quantity and consensus accumulate to a certain extent, who says digital gold cannot surpass real gold?

Many seasoned investors know these fundamentals of Bitcoin, but what fundamental does DOGE rely on to increase by hundreds of times in just a few months?!

2. The Fundamentals of Dogecoin You Can't Understand

1. No Value

Yes, you read that right; perhaps it is precisely because it has no value that it has value.

In December 2013, two engineers modified Bitcoin's code to create DOGE. Even the founder himself said in an interview, "We think this is a big joke destined to disappear." It seems they didn’t even keep some for themselves.

When everyone, both inside and outside the circle, knows it has no value, yet its market cap is in the hundreds of billions of dollars, it might inexplicably have value…

DOGE also has a very unique concept; if Bitcoin is a rebellion against the traditional financial system, then it is a rebellion against Bitcoin, having a major characteristic that is completely opposite to Bitcoin—Bitcoin has a fixed total supply with no inflation, while DOGE started with 100 billion and has an unlimited annual inflation of 5%.

2. Use Cases

You can't deny that at least in recent years, its application scenarios might even exceed the number of Bitcoin users.

Because it can be used for mutual tipping on Reddit. The reason is simple: it’s cheap, so cheap that it’s almost worthless, allowing people to tip each other in tens of thousands or even millions…

This is indeed a relatively high-frequency real application scenario.

3. Security

Realizing that its POW is too weak, it chose to hitch a ride and changed to an algorithm similar to Litecoin, so Litecoin miners can mine both Litecoin and DOGE simultaneously.

Of course, many Litecoin miners didn’t get rich from this step, as most of their mining programs are designed to automatically sell the DOGE they mine, leaving them with very few.

The benefit of hitching a ride is that the cost of double-spending DOGE is the same as double-spending Litecoin, so in reality, DOGE's security can be considered "top-notch" in the community. It’s likely that Litecoin itself didn’t expect that the former Bitcoin and Litecoin would transform into Bitcoin, Dogecoin, and Litecoin.

However, from another perspective, if you believe Litecoin has value, then why doesn’t DOGE have value?

4. Musk

This doesn’t need much elaboration; the countless endorsements from the richest person are well-known in the community, although he ultimately bought BTC, not DOGE.

But who knows, maybe one day he’ll suddenly decide that Tesla supports DOGE payments! Is that possible? This "madman" is unpredictable…

5. Meme

Of course, there have been countless clones of Bitcoin before, many of which, like DOGE, simply copied and pasted the code and made some modifications. Most of them have now "died."

However, Dogecoin endures, and it cannot be denied that this has a lot to do with its logo. That Shiba Inu dog head is just too cute, and dogs are arguably the animals closest to humans, without exception.

Thus, this adorable meme has spread widely, to the point where it can no longer be valued using any traditional financial or even cryptocurrency valuation methods…

6. Cheap

You have to admit that every bull market, new investors are unlikely to buy Bitcoin because it’s just too expensive… You can certainly say they can buy 0.1 or 0.01 BTC.

But it’s useless; they prefer cheap options, ideally being able to buy several coins for a dollar. They don’t know or care about total supply inflation.

In the last round, they found Litecoin; in this round, they found an even better and cheaper target.

Humans have an inherent tendency to buy cheap items; buying 0.01 of A and buying 100 of B, even if the prices are the same, B has a huge advantage for newcomers. This is also why Polkadot surged several times immediately after its split; some say if Bitcoin were priced in millions of satoshis or satoshis, it would definitely not have the current market cap.

7. WSB

Recently, the WSB-WallStreetBets event caused quite a stir in the financial community, where retail investors collectively pushed the stock of the $18 game retailer GME to $483, blowing up a large number of short positions held by Wall Street institutions.

For those who are unaware of this event, I recommend looking up some information; it’s quite fascinating. WSB originated from the Reddit community, and DOGE is the "official" tipping currency of Reddit.

DOGE inherently carries the grassroots culture of the Reddit community, rooted in retail investors and opposing institutional market manipulation, so when the WSB movement spread to the cryptocurrency market, it was only natural that Dogecoin was the first choice.

Moreover, considering many projects in the community where institutions acquire tokens at low prices, package them in just a few months or even weeks, and then sell them to retail investors at high prices, even some star projects and star capital are not exempt from this. For example, Fei, which caused many retail investors to incur significant losses recently, had investment institutions that were quite prominent, but the ones losing money were always the retail investors.

This is also why the Fair Launch proposed at the inception of YFI was so welcomed by the crypto community and has been adopted by more and more new projects. DOGE may represent a relatively Fair Launch in the post-Bitcoin era, a POW type that everyone can afford and access, and this cultural gene is its unique advantage.

Of course, writing about these fundamentals is not to encourage you to buy, as the price is already quite high and the risks are substantial. Just as the saying goes, don’t short a token in a bull market that you don’t understand why it’s rising; its reasons for rising may be hidden from your view.