Article reprinted from: Simplified Blockchain
Author | Mu Mu
Produced by | Simplified Blockchain
For many years, there has been a saying in the cryptocurrency field: 'The biggest risk of Bitcoin is not being able to hold on to it.' Essentially, 'not being able to hold on' is a problem of cognition and information disparity. Since the birth of Bitcoin's genesis block, 16 years have passed, and many still feel that Bitcoin is 'ethereal' and are worried. Rather than discussing 'what is the biggest risk of Bitcoin', it is more about exploring whether people's greatest concerns about Bitcoin's existence are unnecessary...
01. The 'Virtual' Attribute of Cryptocurrency Assets
Cryptocurrencies like Bitcoin have always been classified by a certain segment of the crypto community as 'virtual' assets, which tends to have a negative connotation. When people mention the term 'virtual', it naturally evokes a sense of 'elusiveness' and does not sound like something 'formal' or 'serious'. Therefore, opponents have the argument that virtual assets lack credit backing, and that currency must be based on credit and physical exchange; ultimately, virtual assets are merely a dream.
The reason the above viewpoint resonates with many is that, according to common sense, whether it is the US dollar or the Japanese yen, it is backed and guaranteed by the national credit of the United States or Japan, having stable purchasing power. Cryptocurrency assets, whose origins are unknown, naturally lack these guarantees; how can they be trusted?
In fact, this viewpoint overlooks the technological value behind cryptocurrency assets and does not clarify what 'consensus' really is. Concepts like blockchain technology, Web3, and decentralized finance have already demonstrated practical application value in global payments and clearing. More importantly, the value 'consensus' behind cryptocurrency assets is essentially the same as the consensus generated by credit backing.
The reason currency needs credit backing is that the structure of human society is complex, requiring a unified and powerful centralized organization to act as a credit intermediary to provide a basis for consensus. On the other hand, decentralized entities like gold and stones in rivers possess physical characteristics that serve as their natural consensus. Even without national credit backing, in everyone's consensus, stones are hard, gold is always shiny and does not rust, and is valuable. This is also why ancient human societies were able to use shell money, stone money, and gold as the basic principles of currency.
In short, the value of something is determined not by whether it has credit backing, but by the consensus around it.
02. Is the US a Tool for Harvesting?
In recent years, as a global financial center, the United States has gained increasing influence over cryptocurrency assets. Not only are cryptocurrencies priced in US dollars, but the influx of over a hundred billion dollars into cryptocurrency spot ETFs listed on US stock exchanges is significant, with many publicly listed companies and financial institutions holding Bitcoin. Now, even the incoming president is determined to leverage the advantages of US cryptocurrency assets.
As the US exerts greater regulatory control over Bitcoin and other cryptocurrency assets as well as the market's upstream and downstream sectors, people are starting to worry and even believe that this could become another tool for the US to harvest the world, similar to the US dollar.
This concern is indeed not without reason; the greater the influence, the more it can sway the cryptocurrency market, making it easier for global retail investors to be 'harvested'. Referring to the previous logic of US harvesting, the US attracts global funds into the virtual currency market through financial innovation and dollar hegemony. If cryptocurrency asset prices plummet, it could ultimately lead to capital flowing back to dollar assets, which, to some extent, aligns with the logic of 'dollar harvesting'.
Of course, this concern also has its limitations, as cryptocurrencies like Bitcoin and Ethereum are not initiated and led by the US. They are more driven by grassroots forces through technological innovation. Capital from Wall Street in the US also did not start to invest until after Bitcoin and other cryptocurrencies matured, so this cannot be considered a premeditated 'conspiracy' by the US but rather a field born from technological development and market demand.
Additionally, public blockchains like Bitcoin and Ethereum are technically unlikely to be controlled. Even if some mining pools and service institutions are deployed in the US, their distributed nodes are widely spread around the world. Even if US authorities can impose regulations or laws to restrict local nodes from scrutinizing transactions, overseas nodes can still submit and publish transactions. It's like gold mines scattered around the globe; local authorities can order local gold mines to stop operations, but they cannot command or influence the operations of gold mines in other regions.
Furthermore, the reason the US harvests globally through the hegemony of the dollar is due to its absolute control over the dollar, but can the US control Bitcoin in the same way? No, but the US can dominate Bitcoin like it does with mainstream assets and modern technology such as gold and oil.
On the contrary, the US can also marginalize Bitcoin to a certain extent within specific limits, but it cannot kill it (if it could, it would have died hundreds of times by now). Of course, considering the entangled interests, the US is unlikely to go against its own interests by sacrificing Wall Street capital, at least not before detaching itself from its own interests.
03. Financial Inequality and Unlimited Issuance?
Some people say it is unfair for ordinary people today compared to early participants, which is the financial inequality many speak of. In reality, the Bitcoin network and community information are open and fair; as a public blockchain, it is like a public resource lying there, where anyone can access information and submit transactions to its network. It is just that some people are unwilling to understand and accept new things and do not want to take a step forward.
Some people argue that Bitcoin's cap of 21 million does not exist because its smallest unit, a Satoshi, makes it almost limitless.
This is a somewhat strange viewpoint; changes in units have nothing to do with total quantity. 1 liter of water is enough for 1 person to drink; one cannot say that having 1000 milliliters means it can be shared among 1000 people. The unit changes, but total quantity remains unchanged.
04. Summary
Overall, most people's 'opposition' to Bitcoin stems more from misunderstanding. The 'virtual' era has become a thing of the past; from being an inconsequential 'minor player' to becoming a mainstream asset, Bitcoin's consensus and position have become increasingly solid over the past 16 years, now competing on par with gold. The strong intervention from the US does not currently seem like a bad thing, but there are still many uncertainties, and we must be wary of significant fluctuations. I still believe that cryptocurrencies and AI will jointly lead the reshaping of the future in the digital age.
