The Value and Challenges of Bitcoin: A 12-Year Development Witness

Bitcoin, as a decentralized blockchain currency, has been around for 12 years since its inception in 2009. Its emergence stems from a reflection on the drawbacks of traditional centralized currency systems, aiming to establish a financial system not controlled by a single entity. Over time, the value consensus of Bitcoin has gradually formed and continues to expand.

Recently, the Bitcoin market has been exceptionally active. At the beginning of January 2021, its price broke the $40,000 mark, reaching a historical high of $41,940, doubling in value in just over a month. Although there was a pullback afterward, it still maintained a high level around $35,000. This extreme volatility actually reflects the characteristics of the Bitcoin market—due to its decentralization and anonymity, trading restrictions are relatively loose, leading to an average daily volatility of 3.75%. It is worth noting that in March 2020, there was an extreme case where the daily drop exceeded 50%.

Compared to the bull market in 2017, the current market frenzy shows significantly different characteristics. In the past, it was primarily driven by retail investors, while this round sees substantial participation from institutions. Data shows that in early January 2021, multiple large transfers occurred within just a few days, with the highest single transfer reaching 17,283 Bitcoins (approximately $616 million). More notably, only 0.00695% of Bitcoin addresses control 42.5% of the circulating supply, indicating that large institutional investors are becoming an important force influencing the direction of the market.

The core advantage of Bitcoin lies in its unique attributes. First is security; although private key management still poses risks, the entire system is designed to be extremely secure, theoretically only a party that controls 51% of the computing power can pose a threat to the network. Second is scarcity, with a total supply limit of 21 million coins, and as mining difficulty increases and block rewards are halved, the new supply gradually decreases. This artificially set scarcity gives it a value storage function similar to gold.

However, Bitcoin also faces many challenges. Its high volatility makes it difficult to become a stable means of payment, and the uncertainty of regulatory attitudes casts a shadow over its future development. At the same time, some opinions suggest that stablecoins may replace Bitcoin's position in certain scenarios.

Nevertheless, after 12 years of development, Bitcoin has proven its vitality. Its existence is not just a financial innovation, but also represents a new way of storing and transferring value. Regardless of how the future may change, Bitcoin has already left an indelible mark on the global financial system.