If you ask about one or two years, it is really hard to answer, but if you ask about ten years, the answer is very clear: it is 0.
Because Bitcoin is a highly centralized currency, it is far more centralized than legal currency, with no value for improvement.
Centralization in the Bitcoin industry should not be a secret anymore; everyone is just thinking about making money and, consciously or unconsciously, avoiding this topic.
One, the resources that Bitcoin operates on are centralized.
Bitcoin mining primarily requires two things: chips and electricity.
Some people say that the concentration of chip manufacturers reaches as high as 75%. Of course, chips are about technological competition; we assume that technological competition will always exist for innovation, and the monopoly in the chip industry can still be challenged by later entrants.
The centralization of electricity is basically unsolvable because electricity purely relies on price. If your price is 1 yuan and mine is 0.8 yuan, and northwest is 0.6 and southwest is 0.55, maybe in the mountains of South America or Africa it only costs 0.3 yuan. There will always be a region that can produce the world's lowest electricity price using a certain power generation method, creating the lowest accounting costs, and here the world's largest scale mining farm will be established, making it impossible for any other mining farms to operate economically.
Therefore, Bitcoin, theoretically the blood of global finance in the future, may produce 90% in places like the canyons of Linzhi and Motuo County in Tibet, China. When the county government conducts an environmental inspection, the New York financial market would have to come to a standstill.
The degree of centralization of this financial power is far higher than that of legal currency.
Two, Bitcoin's downstream applications are centralized.
Bitcoin has not developed many downstream applications; the ones that can be counted are just exchanges and wallets.
The centralization of exchanges is obvious; all financial exchanges in the world tend towards centralization. The number of exchanges in developed countries is decreasing, only merging and not splitting. In China, the Shanghai and Shenzhen exchanges are clearly becoming more similar; if not for the protection of legal and political interests, they could and should merge.
Bitcoin (digital currency) exchanges trend the same as other exchanges. Larger exchanges will gather more market information, thus having better prices, gathering more liquidity, so they have more depth, and investing more in protection, therefore being safer, with significant advantages in product design and marketing. As long as a Bitcoin exchange is a bit larger, it will have competitive advantages, and will become larger, ultimately growing to the point of crushing other competitors, eating up the entire market. Digital currency exchanges are the gateway for traditional economies into the Bitcoin world. Whether the Saudi royal family wants Bitcoin, whether the Federal Reserve wants Bitcoin, whether Jack Ma wants some Bitcoin, whether high-frequency trading wants to engage, whether strategy arbitrage wants to engage, whether forward hedging wants to engage, whether bulk trading wants to accelerate, there is nothing in the Bitcoin world that exchanges cannot handle. Monopolizing exchanges is to monopolize the practical first issuance of currency. Bitcoin is much more centralized than legal currency.
Payment wallets develop slowly, and the problem of centralization has not been fully exposed. However, the characteristics of the payment industry determine that it should be centralized.
For example, in the realm of the renminbi, what proportion do Alipay and WeChat occupy in the third-party payment market? Probably about 90%-95%. Payments are a typical network application, establishing the largest market network; naturally, nodes outside the network will be attracted in and will never leave, leading to monopoly for the market leader. WeChat occupies a larger social network beyond payments, so it barely ties with Alipay; if we only look at the payment market, one of these two would definitely disappear.
Bitcoin wallets need to be built as transfer payment tools based on Bitcoin, and the network effect leads it to be monopolistic as well. This is unrelated to the underlying technical architecture of Bitcoin; as long as it is a payment tool for both receiving and paying sides, the result is the same.
I have already given you two visible examples to illustrate that the downstream applications of Bitcoin are monopolistic, that is, centralized.
In fact, any financial role in the Bitcoin world can find a corresponding example in the real world. For example, the security demand for digital currency corresponds to internet company 360. The demand for wealth management corresponds to Tianhong Fund. The demand for savings corresponds to Industrial and Commercial Bank of China. All possible financial institutions that may exist in the digital currency world correspond to some giants in the financial or internet industry.
The reason why real-world giants have not been able to swallow the financial market in one bite is often simply that policies, laws, and politics do not allow them to do so; otherwise, according to the capital volume, Industrial and Commercial Bank of China would have long since bought out the securities trust fund industry. Such things will happen in the digital currency world in the future. In reality, the Shanghai Stock Exchange cannot eat the Industrial and Commercial Bank of China, but Bitcoin exchanges can create or devour Bitcoin banks without restraint. Bitcoin's largest mining farm, largest exchange, and largest bank could completely merge into the same company, and should merge into the same company; why not?
Three, centralization = high efficiency.
When I first bought Bitcoin, it was only $100 each, and within six months it rose to $1,000. Wealth is exciting, but the epoch-making beauty of asymmetric encryption brought into the financial sector by Bitcoin surpasses wealth itself to some extent. This beauty is very attractive, but also very confusing. Many people, including myself, once saw the beauty of technology and forgot the reality of business.
The commercial reality is that as long as Bitcoin is a globally circulating digital currency and is not regulated, it can only be centralized, and its degree of centralization exceeds that of any legal currency.
A centralized central bank is better than a thousand scattered money houses. A centralized exchange is better than a thousand scattered intermediaries. The entire market likes a centralized and efficient structure; with high efficiency, everyone can earn more money. Of course, sometimes it is necessary to intervene in the negative consequences of excessive centralization and monopoly, but generally speaking, centralization means specialized division of labor and full information exchange, which means higher efficiency and more profit.
The economic system requires digital currencies to improve operational efficiency—mining in places with the lowest electricity prices in the world is one method. And the methods to improve efficiency all point towards making the Bitcoin system specialized and centralized.
Many people still think that Bitcoin's problem is a technical issue; if the efficiency is low, upgrade the technology, if it is centralized, upgrade the technology, from POW to POS to DPOS, Lightning Network, offline transactions. In fact, it is useless. As a digital currency product, its centralization is caused by the demands of economic and financial efficiency. The technological improvements made at the grassroots level cannot compete with the shifts and mergers at the application and industrial levels.
For a simpler example, Bitcoin is based on internet nodes; are internet nodes decentralized? They are far more decentralized than Bitcoin mining farms. But is the power in the internet industry centralized? It is extremely centralized. This is the difference between business and technology.
Four, Utopia = Big Brother.
Everyone has heard a bit about the process of the Soviet Union's collapse, right? The central government lost power, and state-owned enterprises were dismantled and sold. As a result, did the people in the country all receive an equal share of state-owned enterprises? No, on the contrary, a very small number of people gathered a large amount of state-owned enterprise shares and became monopolistic oligarchs in various industries.
Bitcoin aims to do something very similar: to strip the right to issue currency from the central bank and distribute it among various PCs. But soon, some clever and quick speculators, relying on the rules, will reclaim the right to issue currency from these PCs back to giant mining farms, transforming into an even more terrifying behemoth than the central bank. Not only that, but they will trace upstream to chips, and downstream to transactions and payments, thereby controlling the entire Bitcoin world. In this pure Utopia, which lacks laws, public opinion, and voting constraints, Bitcoin giants can 'truly do as they please'.
By the way, a side note, some people like to say 'after democracy, kill X's whole family', this idea is ridiculous. These people may not have thought that in a world governed by jungle principles, their own survival is uncertain. Without the protection of laws and rules, whether they can live safely until the evening is a question, yet they dream of killing someone's entire family. Those who say such foolish things will be killed a hundred times by more terrifying violence after 'democracy'.
Bitcoin is the same. If you are still dreaming of being the person who buys yachts and villas overnight after Bitcoin's success, then you don't understand what Utopia means and lack imagination about Big Brother's power. Whether you have ten million or a billion, or whether you're so poor you can't afford pants, they are all just the same kind of trash. Big Brother says upgrade, and you upgrade; says fork, and you fork; says roll back, and you roll back; says lost, and it gets lost. As an ordinary person, you will be washed to death by Bitcoin's large mining farms, large exchanges, large payment platforms, and large banks and funds; you do not belong to the community, do not control the mines, have no laws, no government, no guns, no microphones, and in the end, you won't even be able to afford a rope to commit suicide.
Then I will remember the strict yet gentle central bank mother, but it will be too late.
Bitcoin's Utopia is not that Utopia; Bitcoin's Big Brother is always that Big Brother. If Bitcoin succeeds, it will create a currency that has never appeared in human history, an extreme centralization, which is unimaginable. Its failure is a good thing for all ordinary people.
That's it.
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