Bitcoin as a 'new type of reserve asset' has become an important strategic issue.
Since Bitcoin's birth in 2009, it has undergone numerous doubts, speculation, and controversies, yet it remains steadfast, now stirring a new wave on the global political and economic stage. For central banks worldwide, facing inflationary pressures and concerns over asset value shrinkage, whether to diversify reserves and consider Bitcoin as a 'new type of reserve asset' has become an important strategic issue.
Former Taiwanese Premier and Chairman of the New Generation Financial Foundation, Chen Chong, recently published an article on Bitcoin titled 'New Generation Financial Game: The Formation of the Battlefield'.
The article begins by directly pointing out the core issue: 'If you were the central bank governor of a certain country and saw the following three news items in the short term, would you consider it a conspiracy theory? Or just a farce? Would you remain inactive? Or would you directly dive into Bitcoin planning?'
President-elect Trump advocates establishing a Bitcoin reserve, while the U.S. currently holds about 200,000 Bitcoins due to confiscation and other reasons. Senator Lummis has proposed legislation requiring the purchase of one million Bitcoins within five years.
Russian President Putin, during the Korean lockdown, suddenly made remarks supporting the replacement of the dollar with Bitcoin as a global reserve currency to stabilize the economic order, without discussing the East Asian situation.
Half a month after the U.S. elections, Bitcoin has risen by 45%, and this month has even broken the $100,000 mark (it plummeted to $95,000 on 12/10).
This series of actions has already sparked speculation and discussion among the market and investors, and central banks can no longer ignore the existence and influence of Bitcoin.
Bitcoin for the young generation's financial game
Recently, the price of Bitcoin has soared, breaking the $100,000 mark at the beginning of this month. Over the past 10 years, the global Bitcoin population has surged from around a million to 560 million. Chen Chong believes that the reasons behind this are closely related to monetary easing policies and global inflation, which cannot be overlooked.
The article points out that due to the high volatility of Bitcoin prices, it cannot be used as a payment tool and is not a currency; at most, it is just a commodity. However, it can be used as an investment tool. Therefore, as long as there are people willing to invest in it, Bitcoin will always exist.
In today's market, where traditional financial games have become saturated, young people are unfamiliar with and do not prefer traditional finance, naturally leaning towards emerging financial assets with a home-field advantage.
Facing such a trend, Chen Chong believes that the government should pay more attention to the awakening of the young generation's class consciousness to avoid the emergence of new class struggles.
However, government agencies have always failed to address the social impact of Bitcoin, and even the positioning of virtual asset platforms and trading businesses (VASP) cannot be settled.
Chen Chong pointed out that the Taiwanese central bank has had little appetite for gold in the past six years and probably looks down on Bitcoin as well. However, if it is unresponsive to global inflation and continues to focus on traditional reserve subjects, it risks asset shrinkage.
Should central banks 'dive into Bitcoin'?
Over the years, global central banks have had completely different attitudes towards gold and Bitcoin. In traditional central bank asset allocation, gold has been a representative of stable reserve assets, while Bitcoin has been viewed as a commodity lacking intrinsic value. However, this perception is gradually shifting.
Last month, U.S. Federal Reserve Chairman Powell rarely stated publicly that Bitcoin could be viewed as 'digital gold' and is not a competitor to the dollar. The U.S. Treasury subsequently expressed a similar view, positioning Bitcoin as a storage tool in a decentralized world.
Data shows that among global Bitcoin holders, more than one-third are young people aged 24 to 35. The digital financial rules preferred by this new generation of financial players have gradually stabilized.
The global inflation issue continues to rage, and the foreign exchange reserves and gold that central banks have relied on for decades face the risk of asset value shrinkage. Especially after the 2008 financial crisis, quantitative easing policies have rapidly expanded the money supply, further increasing inflationary pressures. If central banks continue to allocate assets with traditional thinking, they may face further loss of real purchasing power.
As the attitude of the U.S. Federal Reserve and the Treasury gradually shifts towards openness, whether central banks should 'dive into Bitcoin' has become an important policy debate.
Reference: New Generation Financial Foundation
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