According to a report by the (Nihon Keizai Shimbun) on December 21, the price of Bitcoin, a representative cryptocurrency, recently surpassed $100,000. The reason for the price increase is the enhancement of its asset properties. Bitcoin no longer poses a threat to fiat currencies and has made progress in establishing a system to protect investors, which has led to wider acceptance.
'Bitcoin has been the best-performing asset over the past 12 years. And $100 can now only buy goods that were worth $73 twelve years ago.' Brian Armstrong, CEO of the American cryptocurrency exchange 'Bitcoin Base', expressed his joy on social platform X on the 5th. He emphasized that compared to the dollar, which has lost value due to inflation, Bitcoin possesses a strong value preservation function.
Bitcoin is the world's first virtual currency, appearing in 2009. It uses technology to record transaction history on the blockchain, which is jointly managed by everyone. As people recognize the value of the new system, more and more individuals are purchasing Bitcoin, and its price continues to rise.
Cryptocurrencies initially attracted attention for their non-centralized settlement nature, allowing individuals to transfer money freely without going through governments and banks. However, due to the high volatility of Bitcoin's price, even El Salvador, which recognizes it as legal tender, has not widely used it.
However, Bitcoin has gradually developed, thanks to its good reputation as an asset. In 2017, Japan implemented an amendment to recognize Bitcoin as having 'property value' (funds settlement law), leading to a sharp increase in cryptocurrency trading. Japan accounts for more than half of the global cryptocurrency trading.
The craze for personal investment in Bitcoin quickly dissipated, and Bitcoin faced turmoil again in 2020 and 2021.
In response to the COVID-19 pandemic, central banks around the world have been printing money, leading to subsequent inflation.
The emerging term at this time is 'digital gold theory.' The total issuance of Bitcoin is capped at 21 million coins, which has properties similar to gold with limited supply. This is different from fiat currencies, which can easily depreciate due to central banks increasing money printing.
Renowned investor Ray Dalio has been optimistic about Bitcoin since then, and recently he also mentioned the debt issues of major developed countries, stating, 'I plan to invest in hard currencies such as gold and Bitcoin.' 'Hard' refers to supply being controlled.
Bitcoin's total market capitalization is approximately $2 trillion, lower than gold's total market capitalization of $18 trillion. Compared to gold, which is already highly integrated into society, Bitcoin has a larger potential holding population. In other fields, as blockchain technology penetrates society more deeply, the evaluation of Bitcoin will also increase.
Bitcoin has transitioned from a currency to 'digital gold' and no longer poses a threat to fiat currencies. Federal Reserve Chairman Jerome Powell stated regarding Bitcoin, 'It does not compete with the dollar; it competes with gold.' As long as it does not affect the financial system, Bitcoin can be easily accepted.
A survey conducted in April by Laser Digital, a subsidiary of Nomura Holdings, revealed that 62% of respondents believe that cryptocurrencies are an opportunity for diversification, with an ideal allocation ratio of 2.5%.
Some traditional stock investors remain critical of Bitcoin. Renowned investor Warren Buffett is very resistant to Bitcoin, calling it 'like a double dose of rat poison.' In addition to frequent hacking incidents, Bitcoin trading platforms have also faced criticism for being too lenient on anti-money laundering measures.
President-elect Trump will consider easing restrictions on cryptocurrencies. This year, the funds flowing into Bitcoin primarily came through Bitcoin exchange-traded funds (ETFs). With the emergence of Bitcoin ETFs, investors can trade Bitcoin like listed stocks without having to manage and store it themselves. Operators of Bitcoin ETFs not only bear the responsibility of public information but are also regulated by the stock exchange. Gary Gensler, chairman of the U.S. Securities and Exchange Commission, will step down in January 2025. He has ironically stated, 'Bitcoin has become centralized because of the birth of its ETF.'
Whether Bitcoin can become mainstream depends on whether ordinary investors view it as an asset. Relying solely on the backing of politicians (driven by donations from major holders) is not enough; mechanisms to protect investors are also essential. If blind expansion leads to increased risks affecting the financial system, Bitcoin will face cold treatment again.