Bitcoin: The future financial gold standard or a bubble? 

As the financial system continues to evolve, Bitcoin, as an emerging digital asset, is sparking widespread discussion and controversy. Many people are beginning to explore a compelling question: Can Bitcoin replace gold, currency, and the existing financial system? This question is not only about the safety of investors' wealth, but also about the future direction of the economy.

First, we need to understand the nature of Bitcoin. Bitcoin is a decentralized digital currency based on blockchain technology. Its biggest features are its limited supply (21 million coins) and decentralized nature. Unlike traditional currencies, Bitcoin is not controlled by any country or central bank, which makes it theoretically resistant to inflation. In the eyes of many investors, this feature of Bitcoin makes it possible to become "digital gold" and provide a safe haven option during global economic turmoil.

However, as a widely recognized means of storing value for thousands of years, gold still occupies an irreplaceable position in the financial market. Not only has gold survived countless financial crises in history, its physical properties and scarcity also give it inherent value in the eyes of investors. Although Bitcoin has a certain scarcity, its price fluctuates greatly and it is difficult to be widely accepted as a stable means of storing value. For example, in 2021, the price of Bitcoin fell from $60,000 to $30,000 in just a few months. This drastic fluctuation has caused many investors to doubt it.

In addition, the substitutability of currency depends not only on its own characteristics, but also on the degree of social acceptance. As legal tender, traditional currency has been supported and recognized by the state and is widely used in daily transactions. Although the use scenarios of Bitcoin are gradually expanding, it still faces many challenges. For example, many countries have not yet clarified their regulatory policies on Bitcoin, and many merchants are also cautious about accepting Bitcoin payments. Although some large companies such as Tesla and Square have begun to accept Bitcoin payments, overall, the popularity of Bitcoin in daily consumption is still not high.

At the financial system level, the decentralized nature of Bitcoin enables it to circumvent the drawbacks of the traditional financial system to a certain extent, such as high fees and lengthy transaction times. However, this decentralization also means a lack of supervision, which can easily breed illegal activities such as fraud and money laundering. According to Chainalysis data, in 2020, approximately $102 billion in Bitcoin transactions were identified as being related to criminal activities. This has led to stricter regulation of Bitcoin in many countries, further suppressing its potential as a mainstream currency.

From a technical perspective, Bitcoin's blockchain technology undoubtedly has disruptive potential. The transparency and immutability of blockchain provide a new trust foundation for financial transactions. Many people believe that this technology can be applied not only to currency transactions, but also to asset management, supply chain management and other fields. However, the popularization of blockchain technology still faces technical bottlenecks and regulatory barriers. For example, the current transaction speed of Bitcoin is slow, only about 7 transactions per second, while the Visa network can process more than 24,000 transactions per second. This efficiency gap has prevented Bitcoin from forming a competitive advantage in daily payments.

When discussing whether Bitcoin can replace traditional currencies, we also need to consider its potential impact on the global economy. If Bitcoin successfully replaces traditional currencies, it may cause central banks in various countries to lose control of monetary policy, which in turn affects economic stability. Many economists have expressed concerns about this, believing that the popularity of Bitcoin may cause instability in the financial market, leading to economic fluctuations.

However, despite facing many challenges, Bitcoin supporters are still confident about its future. They believe that with the advancement of technology and the improvement of social recognition of Bitcoin, its application scenarios will continue to expand, thus achieving competition with traditional currencies. Many younger investors, especially millennials and Generation Z, have already regarded Bitcoin as a new way to invest and even an ideal means of wealth storage. According to a survey by Deloitte, about 83% of millennials believe that Bitcoin is the currency of the future.

In this context, there may not be a clear answer to the question of whether Bitcoin can replace gold, currency and the financial system. Its future development will depend on multiple factors, including technological progress, changes in regulatory policies and increased social acceptance. It is undeniable that Bitcoin, as an emerging asset, has already occupied a place in the global financial system and triggered a deep reflection on the traditional financial system.

In addition, it is worth noting that although the price of Bitcoin fluctuates violently, the blockchain technology behind it and its application potential cannot be ignored. Many companies and institutions have begun to explore the application of blockchain in finance, supply chain, medical care and other fields. This technological innovation may reshape the future business model. Therefore, although there is still controversy about whether Bitcoin itself can replace traditional currency, the technology behind it has undoubtedly brought us new thinking.

In general, whether Bitcoin can replace gold, currency and the financial system depends on the combined effect of many factors. Despite its great potential, it still faces many challenges. The future financial system may be a diversified ecosystem in which Bitcoin, traditional currencies and other digital currencies coexist and jointly promote the development of the global economy. This process is full of uncertainty, but also full of opportunities. In this new era, as investors and ordinary people, we need to keep an open mind and pay attention to the latest developments in financial technology in order to find our place in the future economic environment.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

Bitcoin is not just about money, it is about freedom. People often say that Bitcoin will replace gold, currency or the financial system, but in fact, Bitcoin's goal has never been these, it is more like a substitute. This article is mainly divided into two parts. First, it explains the main reason for the birth of Bitcoin, and then explores whether it can become a substitute for the current financial system. To this end, let's first introduce how the financial system works.
Modern financial system
(New York Stock Exchange - a symbol of the current financial system)
The current financial system is subject to third parties who enforce laws, monopolize the system, and allow users to exchange currencies without trusting each other.
In the past, people used to exchange money for goods in person. With the development of online payment, the traditional way of value exchange is gradually disappearing, and how to gain mutual trust becomes particularly important.
In the existing system, governments or financial institutions are actually some form of intermediary institutions. Their existence ensures that two or more people can exchange value without mutual trust. It can be said that without such a third-party institution, our financial system will collapse.
Although third parties bring transaction convenience, this comes at the expense of financial freedom.
In fact, the current financial system is limited in two ways:
1. The only payment medium recognized by each country is legal tender. When exchanging currencies, it can only be done through banks or other institutions, and the transaction fees and intermediary fees incurred will be borne by us.
2. There is no privacy and freedom other than cash: all money flows must go through a centralized system.
Since the digitization of money, our privacy is slowly disappearing because every transaction we make leaves a digital trace. Financial institutions can collect a lot of data matched to individuals, which they can eventually use to their advantage, whether through marketing campaigns or trying to tailor their services to you.
The end result is that we lose our financial freedom, we lose control of our own money, and our information becomes part of the current financial system.
Weaknesses of the current financial system
The current financial system strikes a balance between trust and individual property freedom. Although it solves the trust problem, this structure has major flaws:
1. Single Point of Failure
The current system is top-down and characterized by a third-party intermediary. This means that users are paying high intermediary costs because they cannot trade directly, and the system itself is centralized, with a single point of failure leading to overall failure. If the government that controls the current system collapses, the entire system will collapse with it.
2. Not open
Due to its centralized nature, the system does not allow anyone to join.
In fact, top financial institutions act as gatekeepers. Due to regulations, they are required to collect personal information of their customers.
The system is therefore open only to those who are deemed “trustworthy.” This inevitably excludes from the system all those who lack the necessary qualifications: the poor, the undocumented, the persecuted.
In short, the institutions that control the current financial system can arbitrarily decide who can and cannot enter the global economy.
3. Not without borders
Although we live in a globalized world, the economic system does not exist in this way.
The fact is that currencies are still country-centric. Cross-border and multinational transactions are still inconvenient and costly. Even if our payments are electronic, if we pay from another country, there are still additional fees.
4. Vulnerable to censorship
The current system allows for censorship, and while this can be a good thing in some cases (such as targeting money launderers), this power can also be abused, such as when the United States used the dollar to enforce sanctions on Iran and exclude it from the global economy.
Therefore, the Bitcoin white paper says:
We cannot achieve completely irreversible transactions because financial institutions will inevitably step in to mediate disputes.
The existence of financial intermediaries will also increase transaction costs, limit the minimum feasible transaction size, and limit daily small payment transactions.
Because of the potential for chargebacks, trust is required between both parties of the transaction, and merchants must be wary of their customers, so they ask for completely unnecessary personal information from customers.
The historical significance of Bitcoin
Now that we have talked about the current situation of the financial system, let us discuss the historical significance of the creation of Bitcoin.
The Bitcoin white paper was released in October 2008, when the world was in the midst of a financial crisis. The first transaction took place on January 3, 2009.
Embedded in the trade was a headline from that day's Times newspaper, which read: "Chancellor on brink of second bailout of banks, 3 January 2009."
On the same day that Bitcoin was released, the US government provided a $900 billion bailout to banks. During the global financial crisis, the weaknesses of the trust-based financial system became particularly apparent.
Now let’s clarify the goal of Bitcoin and why it was created, many people are confused about the answer to this question.
Many people believe that Bitcoin was born with the idea of world domination: the grand goal of replacing the current financial system. However, this has never been the goal of Bitcoin.
Instead, anyone who has read the Bitcoin whitepaper knows that the goal of Bitcoin is to provide a peer-to-peer alternative to the current financial system. An electronic form of cash that would allow people to transact directly with each other, without the need for a financial institution or any third party.
It is based on the premise that the current trust-based system is flawed. In fact, even if banks and governments have some problems in handling the exchange of value, we still need to trust them.
We can only trust that they will not abuse their power, invade our privacy, or perform dangerous operations with our funds. We can only trust that they will act ethically and in good faith.
However, we have witnessed too many examples of untrustworthiness in the past, most notably during the last economic crisis. It can be said that this is why Bitcoin was forced into existence: we have to trust existing institutions because there is no other choice.
The emergence of Bitcoin has given us a lot of hope:
Become a peer-to-peer alternative to the current centralized system;
Providing economic freedom to people;
Give people full control over their own funds.
How does Bitcoin replace third parties?
Now that we have clarified why Bitcoin was created, let’s move to the next step: How can it become an alternative to the traditional financial system?
As mentioned earlier, our current financial system relies on a third party to enforce trust between two or more users exchanging value.
Instead, Bitcoin relies on the principles of cryptography.
The main problem that must be solved is the "double spending" problem, that is, how can A verify that B has not double-spent the money that he is now sending to him?
Currently this problem is solved by a third party that checks every transaction for duplicate payments. However, this system has its own flaws because the fate of the entire system depends on the entity that runs it and every transaction must go through them.
Bitcoin can solve this problem:
1. Peer-to-peer, distributed system architecture: Any computer connected to the Bitcoin network is generally defined as a "node".
2. A timestamp service, where every transaction has a timestamp. It is shared with every node in the network in chronological order, and can prove that specific data must have existed at a specific time.
3. Consumption-based calculation method to prove that the transaction is valid: In order to prove that the transaction is valid, it is necessary to run node calculations, and at this time the CPU time and power consumption are consumed resources.
The previous trust model is thus replaced by a new one, in which the recipient needs to prove that, at the time of the transaction, the majority of nodes agree that it is valid, i.e., that the money has not been double-spent before. However, this process is performed automatically by the network: users do not need to prove themselves.
All of these factors put together allow the blockchain underlying Bitcoin to rely not on financial intermediaries or third parties, but instead on a distributed system that has complete knowledge of the correct transaction history at any given time.
Bitcoin is the only alternative to the current financial system
From the above we can see:
1. Bitcoin was created as an alternative to the current financial system (not to replace it!)
2. It has a decentralized system and does not require trusting a third party;
3. In the blockchain technology underlying Bitcoin, third parties are replaced by sound cryptographic principles;
4. Allow peer-to-peer transactions, reduce intermediary costs, fraud and privacy leakage;
5. The most important point is that it allows users to have full control over their funds.
The purpose of this article is by no means to simply explain the inner workings of Bitcoin, but to present a different perspective on Bitcoin. After all, since its inception, Bitcoin has been misunderstood and used by the media and experts to gain what they want: more fame, more viewers, more clicks.
Bitcoin is more than just a technology, it is an alternative to the current financial system. It is secure, decentralized, open, and impossible to censor or shut down. Our reliance on third parties makes the current system inefficient and vulnerable to abuse and manipulation, and full control of our funds should be a fundamental right of people, which is why Bitcoin is so important.