Note: Written on the eve of the human democratic revolution
This article discusses some of my judgments and predictions about the future of Bitcoin, aiming to remain rational and objective.
Bitcoin Is About to Enter a Period of Major Value Discovery
I once mentioned in my previous blog post "Talking About Bitcoin Again" that Bitcoin is a great democratic revolution in human history, which I believe does not require much further explanation. Today, I would like to add an adjective to this revolution: Bitcoin will be the largest democratic revolution in human history. Humanity is currently on the eve of this revolution’s breakout.
In my earlier blog post "My Understanding of the Financial Market", I also discussed how wealth originates from the indiscriminate labor of humanity. Of course, this is a Marxist theory, and I’m just paraphrasing. Bitcoin has already become a tool for storing wealth that is agreed upon by some people. Gold, as a traditional wealth store, has educated human society for thousands of years. Here, I would like to share an example that can be used to draw a parallel with Bitcoin's value discovery process—the discovery of gold mines during the American Westward Expansion.
During the American Westward Expansion, on January 24, 1848, James Marshall discovered gold near the Sutter’s sawmill in California. Despite Marshall and his employer, John Sutter, initially trying to keep the discovery secret, the news quickly leaked. By March 15, the California Star in San Francisco reported the discovery for the first time. Subsequently, merchants like Brannan spread the news further by showcasing gold samples. By mid-June, three-quarters of San Francisco’s residents had left their homes, and the town was nearly empty. This gold rush spread across the country and even worldwide. From March 1848 to March 1849, about 80,000 people flocked to California, and by the end of 1849, the number reached 100,000. By the end of 1853, it increased to 300,000. Therefore, the news of the gold mine spread rapidly in just a few months, leading to a massive gold rush. According to U.S. population data from 1790 to 2000, the population of the U.S. in 1850 was about 23.19 million.
In the 19th century, due to technological limitations, the speed at which information spread was far slower than in today's society, and physical space also limited the extent and speed at which the value of a gold mine could be discovered. Nevertheless, the statistical data shows that this gold mine still attracted more than 1% of the U.S. population. Nowadays, according to statistics, the world population is about 8 billion, and the number of people involved in cryptocurrency trading is at most 500 million. A large portion of human society has not yet realized Bitcoin’s value.
Additionally, with more than a dozen states in the U.S. announcing that they approve the use of pensions or public funds to invest in Bitcoin, including proposals by the Czech National Bank, and the launch of Bitcoin ETFs in several countries, these events will undoubtedly accelerate Bitcoin’s value discovery process.
Moreover, after more than a decade of a rough and chaotic crypto industry, it has now entered a stage of refined operation. In fact, so-called refined operation simply means that compliance comes first. For example, the fines paid by CZ are essentially a form of protection fee, much like the mafia in 19th-century America. After collecting the protection fee, the U.S. government naturally has to take on corresponding responsibilities and obligations, thus binding mutual interests.
Based on this, I would like to make another assumption: Bitcoin’s price decline will be smaller compared to the past, and we won’t see declines of 70%-80% within a single year again. However, the rise is uncertain and depends on the degree and speed of value discovery.
Bitcoin's Market Cap Proportion Relative to Altcoins Will Keep Increasing, Approaching 1
Recently, Michael Saylor made a statement that "Altcoins will soon melt down." I fully agree with this view.
Regarding the development of cryptocurrencies over the past few years, I believe the direction has been wrong, especially in the exchange industry. Blockchain itself was designed to achieve decentralization, not to allow a few individuals to make massive profits. I believe if cryptocurrency exchanges only provided Bitcoin trading, did not misuse user funds, did not offer high leverage, and ensured proper KYC, no one would end up in jail. However, human greed pushed them to take risks. As long as they were big enough to avoid collapse and paid the required protection fees, they could escape disaster. Exchanges took advantage of human greed by encouraging users to engage in highly leveraged contracts and trade air tokens, while secretly misappropriating user funds to manipulate the market, thereby ensuring steady profits from “cutting the grass” (a term for profiting off naïve traders).
I must say, human society has always been like this: the truth often hides within falsehoods. Lies need another lie to cover them, while truth, in its defense against lies, also hides behind them. Hence, the world is full of lies, and we are walking a tough path to value discovery. Of course, perhaps it is precisely because of this that when we break through the fog and discover the truth, it will highlight its true value.
Thus, Bitcoin stands in stark contrast to other cryptocurrencies, much like truth contrasts with lies. Bitcoin was the first cryptocurrency created, and no one could foresee its future when it was created—just like Pandora’s box being opened. All other cryptocurrencies, no matter the reason they were created, were inspired by Bitcoin, similar to someone who opened Pandora’s box and then tried to create another one. These are fundamentally different things, yet many people confuse them. Bitcoin is like a wise sage hidden amidst these illusions, waiting for others with wisdom to discover it. Some laughable bloggers even use Bitcoin’s market cap dominance charts to make predictions, claiming Bitcoin’s market share will never surpass a certain value. Seeing this, I can only laugh—it’s like carving a boat to catch a sword. Many of these people made large profits from altcoins, but as the saying goes, "Success and failure are two sides of the same coin." Their success in air tokens will eventually lead to their failure with air tokens.
As the chaotic era of cryptocurrencies comes to an end and more rational investors enter the market, Bitcoin will definitely experience a renewed value discovery process. At that time, Bitcoin’s market share, compared to other altcoins, will gradually rise and approach 1. Another piece of evidence supporting this view is the "Matthew Effect" observed in U.S. stocks, where the average stock price of the “7 sisters” far outperformed other companies.
Additionally, Bitcoin, as a store of wealth, will eventually be integrated into the global payment system. Therefore, the consensus mechanism will help people realize the great value of having a unified global currency. Other cryptocurrencies, either due to their lack of decentralization or insufficient popularity, will become mere grains of sand in the river of history.
Bitcoin Will Achieve True Decentralization
This judgment is based on a fundamental premise: everyone has a different understanding of the same thing, and with time and physical space changes, each person’s recognition of the matter will also change.
Thus, everyone’s expectations of Bitcoin’s price will certainly differ. This inconsistency will be concentrated during Bitcoin’s price increase cycle, and the result will be that Bitcoin will achieve a high degree of decentralization, meaning more and more people will hold Bitcoin. Ultimately, Bitcoin will become something akin to gold.
Saylor mentioned in a previous interview that "The first country to print money and buy Bitcoin will win." I agree with this viewpoint, but the premise is that the size of the country must not be too large. Governments understand that they cannot hold excessive amounts of Bitcoin. If they do, it will undermine the decentralization of Bitcoin, making it impossible to achieve a consensus across humanity. They know the right balance.
Bretton Woods III: The Dollar Pegged to Bitcoin
This is just my speculation or suggestion.
Firstly, during the Industrial Revolution era, Britain unified the international trade payment and settlement rules. The British government promised that the currency’s gold content might be insufficient, but it could be exchanged for gold at the currency’s value. This is national credit. Based on this, Britain truly rose to become the "Empire on which the sun never sets," and the British pound became the world’s first international currency.
After World War II, the U.S., carrying the residual power of the greatest victorious nation, pegged the dollar to gold and created the modern international trade payment system—the Bretton Woods system. In my view, the Bretton Woods system is essentially no different from Britain’s rule, except for the change of the central player. In 1971, when Nixon canceled the promise of the dollar being redeemable for gold, it led to the apparent collapse of the Bretton Woods system. However, the dollar remained the world’s currency, as its purchasing power stemmed from U.S. national credit. The second phase of the Bretton Woods system was through the dollar being pegged to U.S. Treasury bonds.
Currently, we know that U.S. national debt has grown to an irreversible level, reaching $36 trillion, while U.S. fiscal revenue is only $4.9 trillion per capita. Even if all U.S. citizens stopped spending, it would take over seven years to pay off the debt, but the U.S. government’s annual expenditure in 2024 is $6.8 trillion, which far exceeds that number. In other words, the U.S. is borrowing to pay old debts, and other countries are doing the same.
In this era of worsening conditions, I believe that correcting the imbalance must go to the extreme. To combat severe inflation, deflationary assets must be used. If the U.S. government wants to maintain its national credit in the future, it must consider pegging the U.S. national credit to another deflationary asset—Bitcoin. I call this the third phase of the Bretton Woods system.
Conclusion
This is a war between the left and right, a revolution where everyone opposes everyone else. For Bitcoin, Trump’s rise to power is just noise. As long as national ideologies exist, decentralization and Blockchain will always be topics that cannot be avoided. No one knows what its future holds. The path of value discovery is full of thorns and obstacles. The peak gives rise to hypocritical support, while dusk witnesses devout followers. History has never changed. Bitcoin will evolve amid controversy and will eventually fade away in consensus.
References
The Spread of News After the Discovery of Gold Mines During the American Westward Expansion
Samson Mow: Holding Bitcoin and Surviving the Bitcoin Price Dips is a Key to Wealth Transformation