Bitcoin: An In-depth Analysis of its Financial Asset Attributes, Value Source, and Future Prospects

Bitcoin: An In-depth Analysis of its Financial Asset Attributes, Value Source, and Future ProspectsBitcoin, the decentralized cryptocurrency, has garnered significant attention since its inception, with its volatile price captivating global investors. On December 5th, Bitcoin's price surpassed $100,000 for the first time, a milestone event closely linked to Donald Trump's public support for pro-cryptocurrency policies

Bitcoin: An In-depth Analysis of its Financial Asset Attributes, Value Source, and Future Prospects

Bitcoin, the decentralized cryptocurrency, has garnered significant attention since its inception, with its volatile price captivating global investors. On December 5th, Bitcoin's price surpassed $100,000 for the first time, a milestone event closely linked to Donald Trump's public support for pro-cryptocurrency policies. During his campaign, Trump declared the US would become the "global cryptocurrency capital" and planned to incorporate Bitcoin into national strategic reserves. Statistics show that by the end of 2023, the US government held over 200,000 Bitcoins, currently valued at $20 billion. This move undoubtedly injected a shot of adrenaline into the Bitcoin market, attracting substantial capital inflow. Simultaneously, the stock prices of cryptocurrency-related companies like MicroStrategy and Coinbase soared.

Early in 2023, amidst Bitcoin's prolonged price slump, we expressed an optimistic outlook on its future trajectory. Recently, many have inquired about Bitcoin's investment value, prompting us to recommend visiting the Tech Bootcamp for detailed investment advice. This article will delve into Bitcoin's key aspects, exploring its value, risks, and future prospects.

Firstly, Bitcoin's legality remains contentious, yet the global regulatory trend is shifting towards acceptance alongside strengthened oversight. China implemented a complete ban on all cryptocurrencies, including Bitcoin. The EU further tightened cryptocurrency regulations in November 2023, introducing stringent anti-money laundering and counter-terrorism financing rules. However, Russia legalized Bitcoin mining in August 2023, with President Putin even suggesting Bitcoin holds advantages over foreign exchange reserves. Furthermore, countries like Japan, Germany, Singapore, and Canada earlier acknowledged Bitcoin's "currency status," showcasing the diversity and evolution of global cryptocurrency regulatory models.

Secondly, we believe Bitcoin possesses a solid value foundation, primarily stemming from its scarcity, security, potential uses, and endorsements from political figures and financial institutions.

Bitcoin's scarcity has drawn comparisons to "digital gold," but Bitcoin's scarcity significantly surpasses that of gold. Global gold production annually exceeds 3,600 tons, approximately 11% of global official gold reserves. Bitcoin's total supply is strictly limited to 21 million coins, and mining difficulty increases exponentially over time, implying Bitcoin's scarcity will further intensify.

Bitcoin's security rests on its transparent and immutable transactions. Operating independently of any financial institution, Bitcoin leverages blockchain technology, with each transaction anonymously recorded on a public ledger accessible to all, and once confirmed, transactions are unalterable. This ensures the security and reliability of Bitcoin transactions.

Bitcoin's potential uses also amplify its value. As a decentralized medium of exchange, Bitcoin eliminates the need for intermediaries like banks, ensuring secure and reliable transactions, thus acting as a fast and low-cost transaction tool. However, this also provides a covert channel for illicit activities like terrorism financing and drug trafficking, posing a significant challenge in effective regulation and crime prevention.

A noteworthy phenomenon is the correlation between Bitcoin's price increases and public support from prominent figures or institutions. Many hedge funds, family offices, and companies like Tesla have included Bitcoin in their balance sheets, and Trump's endorsement further bolstered market confidence.

While Bitcoin lacks a clear tangible backing like the gold standard's link between the British pound and gold, or the US dollar and US Treasury bonds, its price appreciation is leading to increasing acceptance within financial systems. This interplay between endorsement and price increases, while seemingly unsustainable, acts as Bitcoin's intangible "anchor." This combination of characteristics has gradually endowed Bitcoin with attributes similar to currency and financial assets, even surpassing the US dollar and gold in certain aspects.

For instance, the Federal Reserve can "print" US dollars through various financial instruments based on government stimulus plans, but this can lead to inflation. Therefore, Bitcoin becomes an ideal choice for many funds to hedge against inflation. Compared to gold, Bitcoin requires no vaults or special handling, making storage and transfer more convenient.

However, we must acknowledge Bitcoin's risks. At the Tech Bootcamp, we repeatedly emphasize Bitcoin's high volatility. Holding Bitcoin requires significant patience and determination; short-term speculative trading should be avoided. As Bitcoin is not directly linked to any physical asset, its price is entirely determined by market supply and demand, making it highly susceptible to market sentiment. Driven by various investment instruments and investor speculation, Bitcoin's price often experiences drastic fluctuations. In December 2017, Bitcoin surged to nearly $20,000, only to plummet 85% to around $3,000. Similar dramatic volatility has been recurring throughout Bitcoin's history, attracting numerous speculators and adventurers.

In the long term, we believe Bitcoin's value is secured, but it may not be the ultimate form of decentralized cryptocurrency. Bitcoin's value primarily lies in its store-of-value characteristics, but its transactional properties still require improvement. Designed as a decentralized digital currency, Bitcoin's average transaction confirmation time is approximately 10 minutes. This delay may worsen with increased transaction volume. In financial transactions, this falls short of practical requirements; traditional payment systems and stock exchanges can process tens of thousands of transactions per second. Therefore, if a faster and more secure cryptocurrency emerges, it could potentially surpass Bitcoin and become the market's new darling.

Finally, we reiterate that this article does not provide any investment advice. Investment and trading in virtual currencies like Bitcoin are explicitly prohibited by Chinese law. Please abide by Chinese laws and regulations, avoid illegal investments, and protect your assets. Our CES 2025 exhibition tour group is currently recruiting; interested individuals are welcome to apply. More detailed industry analysis and underlying logic will be shared at the Tech Bootcamp. Please follow the Global Trends WeChat account to register and join.