In 2021, Bitcoin’s path to becoming a reserve currency has been determined

Bitcoin’s short 12-year history has been filled with exciting moments. From the flawless concept conceived by Satoshi Nakamoto to the extremes of rapid price increases, catastrophic corrections, infamous exchange hacks, and Bitcoin’s internal civil war; there haven’t been many years as exciting for Bitcoiners as 2020.

Just like Paul Revere, after years of hard work, Bitcoiner, "institutions" seem to have finally arrived, and new demand in the next few years will also drive Bitcoin to become the next world reserve currency. (Note: Paul Revere (December 21, 1734-May 10, 1818) was an American silversmith, early industrialist, and a patriot during the American Revolutionary War. His most famous deed was warning the colonial militia of the imminent British attack on the eve of the Battle of Lexington and Concord.)

The Case for Modern Store of Value

As the end of 2020 approaches, more than 5% of Bitcoin's supply is held as fiscal reserve assets by more than 20 public and private companies, a trend that began to emerge this year.

During the same period, the U.S. dollar’s ​​M1 money stock (a measure economists use to quantify the amount of money in circulation in a country) increased by more than 60%. The reckless monetary and fiscal policies of the U.S. central bank and government in response to COVID-19 have thrust Bitcoin into the spotlight as a potential new store of value.

This direct injection of dollar liquidity into the U.S. and the broader global economy is known as quantitative easing (QE). The Fed’s arbitrary increase in the money supply distorts price signals, lowers real wages, increases wealth inequality, and ultimately undermines free markets. Savers lose as their time and wealth are plundered in the toxic process of inflation. While the dollar’s ​​global reserve currency status creates intrinsic demand, this trend of currency debasement does not seem sustainable in the long term. The case for a currency with a hard supply cap that cannot be manipulated at will by governments and institutions has never been stronger.

As Gigachad Michael Saylor said, Bitcoin is moving towards a bull market step by step.

Saylor, one of the longest-serving CEOs of publicly traded tech company MicroStrategy, has become this year’s new Bitcoin star by using his company’s balance sheet to buy nearly $1.3 billion worth of Bitcoin (about 70,000 coins). And he’s not the only one to spot this trend.

Paul Tudor Jones, Stanley Druckenmiller, Scott Minerd, names associated with institutional hedge funds have also opened their minds and portfolios to Bitcoin. Large private banks such as Citigroup have also predicted that Bitcoin will rise to a price of $300,000 to $400,000 in the next year. As we continue to destroy the purchasing power of the dollar, this trend of asset allocation scarcity gaming will only continue to grow in the future.

Finally, and of course most importantly, Bitcoin’s indispensable NgU (Number Go Up) will continue to propel us to new highs. On December 16, Bitcoin broke its previous all-time high in 2017, rising above $20,000 for the first time. Further appreciation in the price of Bitcoin over the next decade will push Bitcoin into the mainstream as a corporate reserve asset. Higher prices will attract new eyes, increase awareness, and ultimately reduce volatility. In a world built on monetary slavery, Bitcoin remains a shining beacon of hope.

Protocol improvements and ecosystem innovation

As a technologist, improvements to different layers in the Bitcoin protocol remain the most exciting advancements in 2020. Schnorr Signatures/Taproot/Tapscript, through multiple layers of Bitcoin Improvement Proposals (BIPs), were incorporated into the core codebase earlier this year. Among them, "Taproot" significantly improves the digital signature algorithm used by Bitcoin. Large-scale improvements in on-chain privacy, scalability, and transaction efficiency are also embedded in the Taproot upgrade. This series of upgrades will further improve the adoption of the Lightning Network, multi-signature transactions, and CoinJoins, ultimately leading to a safer and more private Bitcoin experience.

Beyond improvements to the core protocol, the innovative ecosystem around Bitcoin is continually improving the tools available to Bitcoiners. I’d like to give a shout-out to some of my favorites below:

• Swan Bitcoin: A new way to buy Bitcoin that allows you to adopt a long-term investment mindset through dollar-cost averaging

• Specter: A desktop interface with hardware wallet integration for easy-to-use multi-currency transactions

• Strike: A payments app that lets users pay invoices with Bitcoin using USD

• ColdCard: A secure way to store private keys on devices not connected to the internet.

Outside of Bitcoin tools, developer funding through businesses and non-profit entities has begun to become regular throughout 2020. Organizations such as the Human Rights Foundation, Square, and Kraken have begun sponsoring developers to encourage them to improve Bitcoin full-time. Websites such as BitcoinDevList and BitcoinACKs also incentivize ordinary Bitcoiners to contribute to the Bitcoin circular economy by donating to developers.

Finally, thought leadership will continue to improve the educational experience of Bitcoin, otherwise known as “falling down the rabbit hole.” Podcasts, books, articles, conferences, and Bitcoin Twitter feeds continue to cut through the complexity of Bitcoin with digestible, entertaining content for pre-coiners and Bitcoin enthusiasts. As more and more people dive into Bitcoin, the influx of wisdom and ingenuity will propel humanity into the stratosphere of innovation in the coming decades. And the synergy of this thought leadership will improve the lives of all Bitcoiners.

Looking Ahead: The Battle Ahead

As we approach the new year and imagine the road ahead, a few trends seem to be emerging. The first is the introduction of central bank digital currencies (CBDCs), which will seek to replace the private banking sector through a combination of central banks and fintech. New currencies such as the digital dollar are attempting to accelerate our move toward an Orwellian future through direct taxation, capital controls, financial surveillance, and universal basic income. (Note: The Orwellian future refers to the totalitarian future described in George Orwell's literary works or his dystopian novel 1984 (1949))

I want to be clear: these currencies are no greater threat to Bitcoin than any of today’s fiat currencies. Over 90% of the U.S. dollar is already in digital form, and most governments want to phase out cash entirely in the next few years. Creating a CBDC does not solve the problem of currency debasement, nor does it solve the problem of financial surveillance and censorship. Bitcoin remains the only incorruptible currency available today.

The second trend is attempts to regulate Bitcoin. We have already started to hear rumors of self-custody restrictions floating around. A full self-custody ban is unlikely, but withdrawal restrictions and additional KYC regulations are almost certain . In the next few years, anyone who tries to use Bitcoin privately will be under direct attack. We must fight back against this. Privacy itself is not illegal, it is the cornerstone of freedom. If Bitcoin holders give up the ability to self-custody their Bitcoins and give them to institutions, then this will be one of the only real threats to Bitcoin.

The Bitcoin protocol is designed under the constraints of social consensus. Anyone who chooses to use Bitcoin must agree to a set of rules that are validated by others on the network. You agree to these rules when you self-custody Bitcoin, run a Bitcoin node and validate your own transactions, or mine Bitcoin and contribute to securing the network. Giving up the ability to self-custody Bitcoin and independently audit the supply would invalidate the social consensus of the Bitcoin protocol and allow these rules to be changed. Individuals must be willing to fight for what they believe in. And I believe in Bitcoin, so I am ready to fight for it.

Finally, after all attempts to copy Bitcoin have failed, governments will have no choice but to adopt Bitcoin or risk being eliminated. This is the last remaining stage on the road to the Bitcoin standard. And competitive game theory will force governments to start acquiring Bitcoin by any means necessary, i.e. mining. After all the government's "weapons" are exhausted, a new world reserve currency will emerge, and it is Bitcoin.

Author: KAZ BYCKO

Compiled by: Public account @萌眼财经