The current world has formed a wonderful combination, with technological libertarianism binding itself to Trumpism. This is a deep alliance between two major right-wing forces—technological right and political right—creating perhaps the largest right-wing wave in human history to date. Technology itself is neutral, but its functions can lean. Decentralized blockchain technology and distributed ledgers embody a right-leaning technological ideology, a deconstruction and contempt for central authority. Trumpism represents a political rightward shift, and an extreme radical right, a deconstruction and contempt for traditional establishment authority politics. The astonishing breakthrough of Bitcoin above $100,000 is essentially a major re-evaluation of global political and technological rightward shifts. More and more right-leaning countries are dispelling leftist concerns about digital currencies replacing fiat currencies and strict regulation. In the complex world of digital economy, digital currencies are gradually moving towards 'losing control,' with a crazy surge—though, of course, it will inevitably lead to crazy volatility.
From an intuitive perspective, Bitcoin is a technological emergence that challenges production relationships with a form of productivity—disrupting the monetary system with digital technology—the utopian scenario of currency non-statehood envisioned by Hayek has finally been realized with the support of blockchain technology. Bitcoin seems to be a precious shell accidentally picked up by those 'bad kids'—Satoshi Nakamoto and his companions—who are dissatisfied with the status quo, do not blindly follow authority, and dare to break conventions, in the vast and boundless ocean of digital information technology. But when this shell was first found, most people did not realize its value. More than twenty years ago, when Bitcoin first appeared at just a few cents, no one probably imagined that it could rise above $100,000 today. Four years ago, when Cathie Wood claimed that Bitcoin would exceed $100,000, most people mocked it as a daydream. Even after the pandemic, when Bitcoin rose nearly tenfold, investment guru Warren Buffett dismissed it as a bubble and a scam. In this way, Bitcoin has gradually created the myth of asset valuation amid the world's ridicule and disdain. Due to the theoretical research on the digital economy and digital finance lagging behind the rapidly advancing reality, our understanding of digital currency seems relatively poor, even ignorant. Therefore, in the cryptocurrency world, the approach to digital currencies can only be 'believe it first, then see it'—this inevitably has some flavor of superstition or religion. However, the facts prove everything; we must admit to the market the lack of theoretical research, which has not logically provided theoretical legitimacy and orthodoxy for the emergence and existence of digital currencies.
Rather than saying Bitcoin is a currency, it is more accurate to say it is an alternative asset. As long as Bitcoin cannot fulfill the functions of a medium of exchange and a measure of value, it is difficult to call it a currency. Of course, many off-market transactions are now starting to use digital currencies, but due to extreme price volatility, they are still measured in dollars, and stablecoins are challenging to use widely in practice, so current digital currencies indeed cannot yet be considered currency. As for the future, with improved usage scenarios and empowered technological upgrades, a more common use as currency should be a trend. I have indirectly encountered a case of overseas real estate transactions directly using Bitcoin, which mitigated operational risks in the transaction through smart contracts, thereby reducing a significant intermediary fee, making it indeed a relatively ideal currency for large transactions.
So, what is this digital alternative asset, a virtual number that appears to have no value in reality, that has created the myth of valuation and wealth? To answer this question, one must first understand the valuation paradigm of modern financial assets, which is no longer represented by classical pricing models like DCF and CAPM, but depends on a core concept: narrative and consensus. The young genius historian Yuval Noah Harari, in the opening of his book, details a unique function of human society: storytelling. Through stories, a belief network is woven, which forms a consensus, and consensus can create a general equivalent. The essence of monetary and financial asset valuation is largely a consensus formed by narratives. As post-modernism increasingly manifests in the collective mindset of the digital world, the massive liquidity injection into currencies worldwide since the subprime crisis has formed enormous financial capital, and financial speculative capital no longer values according to classical pricing models.
So, if Bitcoin has no value, then which currency truly has value? Let's not mention that it has no value in itself, being just a string of numbers or a piece of paper as legal tender; let's look at how much value gold has? Compared to global reserves and trading volumes, what proportion do industrial use and jewelry account for? Gold is currently not a general equivalent nor a measure of value, and it similarly lacks monetary function. However, gold: first, has a strong consensus, a natural store of value and hedging asset accumulated over thousands of years, and has been used as a fiat currency anchor; second, has scarcity, limited supply, with a certain degree of transparency and openness, and cannot arbitrarily increase supply; third, has a complete trading network and infrastructure for circulation and pricing, having become part of classic asset portfolios. Which of these three points can Bitcoin not achieve? First, narrative and consensus; Bitcoin is inherently from the digital world, the native currency of the digital realm, and today's narrative relies on digital dissemination, perfectly fitting the post-modern thought since the digital technology revolution—free-spirited, contemptuous of authority, and unruly; second, supply scarcity, which is the most valuable aspect of Bitcoin, as it has a set of open and transparent algorithmic consensus determining its supply; this story occasionally sparks a buying frenzy; third, the infrastructure for trading and pricing, with blockchain and web3 technology becoming increasingly mature. Considering all of this, it can be said that cryptocurrencies like Bitcoin can indeed be regarded as digital gold mined from the digital world.
Today, global political thought is leaning towards the right, becoming increasingly radical. Meanwhile, the rise of the AI technology revolution has led the technical geniuses of Silicon Valley to become more dissatisfied with the institutions and society created by the current establishment, including the monetary system. As the dollar, as the world currency, has lost its issuance discipline and is completely manipulated by current political needs, there is no need to mention other currencies. Central banks' balance sheets have grown a dozen times, even dozens of times, since the birth of Bitcoin. In the vast ocean of currency, in the free world of digital technology, rather than saying cryptocurrencies are a form of digital gold, it is more accurate to say they are a rebellion by the 'bad kids' against the rigid and boring establishment world. Coincidentally, at this time, a 'bad kid' was also born in the political world, an extreme right-wing libertarian, Trump. The right-wing engineers and the right-wing politicians finally came together and formed an alliance, becoming the driving force behind the repeated explosions of Bitcoin amidst the waves of industrial and political civilization.
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