The Resurgence of Bitcoin
After a period of relative quietness, Bitcoin has once again captured global attention. Recently, its price surged to a historic high of $267, breaking previous records. To put this in perspective, during Bitcoin's early days, someone famously purchased a pizza for 10,000 Bitcoins—now considered the world's most expensive pizza.
In late October, Vancouver introduced the world's first Bitcoin ATM, allowing users to:
- Scan their palm prints to create a digital wallet
- Exchange Bitcoins by scanning a QR code from their smartphones
The collaboration between ChiNext-listed company 35互联 and Zhongjin Online has further fueled interest in Bitcoin ventures. According to Xu Mingxing, founder of OKCoin and former CTO of Douding:
"Most Bitcoin transactions today are investment-driven, far from functioning as a true circulating currency."
Key Aspects of Bitcoin
1. Legal and Historical Context
- Early Challenges: Bitcoin initially gained notoriety for facilitating transactions involving illegal goods (e.g., drugs, firearms), though fiat currencies remain the primary medium for such activities.
- Adoption Timeline: Early adopters acquired Bitcoin when it was valued at just a few cents per unit.
2. Global Interest and Investment
U.S. Investors: Top-tier investors are divided into two main groups:
- Facebook's original investment team
- Individual investors with stakes in companies like Baidu and Tesla
3. The Genesis of Bitcoin
Inflation Hedge: Created as a response to global inflation, Bitcoin mimics gold's key attributes:
- Decentralized distribution
- Difficulty to "mine"
- Resistance to centralized control
- Technical Foundation: Its open-source algorithm ensures no single entity (including its creator) can manipulate its supply.
Comparative Analysis: Bitcoin vs. Other Virtual Currencies
| Feature | Bitcoin | Other Virtual Currencies |
|---|---|---|
| Decentralization | Yes | Rarely |
| Value Stability | High | Low (except Litecoin) |
| Mining Viability | Profitable | Declining ROI |
👉 Explore Bitcoin's mining economics
Government Perspectives Worldwide
- Europe: Actively supportive; policies include tax exemptions (Germany) and national exchanges (UK)
- U.S.: Increasing regulatory scrutiny
- China: Permits trading but prohibits Bitcoin for physical payments
Xu notes:
"Bitcoin's $10B market cap hasn't yet drawn significant government attention."
Advantages and Challenges
Pros:
- Inflation-resistant store of value
- Low transaction costs
Current Limitations:
- Price volatility
- Centralization risks (until wider distribution stabilizes value)
FAQs
Q: Can new virtual currencies compete with Bitcoin?
A: Unlikely—Bitcoin's computational network effects create high entry barriers.
Q: Is Bitcoin mining still profitable?
A: Only in regions with cheap electricity (e.g., China), but scams abound with overpromised ROI.
Q: Will Bitcoin's 21M cap hinder growth?
A: No; divisibility to 8 decimal places allows scalability for centuries.
👉 Learn how Bitcoin wallets work
The Road Ahead
For Bitcoin to become a mainstream currency:
- Price stability must improve via broader distribution
- Infrastructure (e.g., user-friendly wallets) needs enhancement
- Regulatory frameworks should evolve to support—not suppress—innovation
As Xu concludes:
"Bitcoin's future as money depends on decentralization—only then can it achieve the steadiness required for daily transactions."