Why Big authorities scared about cryptocurrencies?

The recent supervision and suppression of the currency circle has confirmed a simple fact, that is, the great powers always have a fear of cryptocurrencies, even the most open attitude of the United States is the same. To be honest, the market value of the overall cryptocurrency system including Bitcoin is only 2 trillion US dollars, which is only equivalent to a large American stock. Among the US financial assets of more than 300 trillion US dollars, it is just an absolute little brother. Don't talk about global financial assets because it doesn't seem to be enough too much fear. So where does this bad attention come from? Is it just awe of new technology?

Market value is obviously not the point. The fundamental reason should be that central banks have seen the destruction and impact of the liquidity of cryptocurrencies on the existing global monetary system . Taking Bitcoin as an example, the daily liquidity (trading volume) at its peak is as high as 30 billion U.S. dollars. In the first half of 2021 , the average daily liquidity is 5 billion U.S. dollars. The global foreign exchange daily trading volume is about 6 trillion U.S. dollars, of which the U.S. dollar accounts for about 89% of the trading pairs, which means that the daily U.S. dollar trading volume is about 3 trillion US dollars. The U.S. dollar and Bitcoin (calculated at 5 billion U.S. dollars per day ) account for only 1/600 of the U.S. dollar transaction volume on average , which is not worthy of attention at all on the surface. but! The daily transaction volume of 3 trillion US dollars has a huge amount of water, and most of them are businesses such as inter-bank lending. This part of the transaction volume is roughly just adjustments on various bank accounts, but in fact it is not enough for "real transactions." And if the retail foreign exchange transaction volume of 15 million people in the world is not found, then you cannot get the latest data. According to my memory , it is only 100 billion US dollars . To put it bluntly, the peak transaction volume of Bitcoin is relative to the real retail transaction volume of foreign exchange. So, it is no longer a "little brother", but a real "brother". Such real liquidity makes Bitcoin more powerful and, in fact, Ethereum look a bit "terrible" and have to be taken seriously. According to the data of Ethereum, the settlement volume in the first half of the year has reached as high as2.5 trillion U.S. dollars, which is estimated to be 5 trillion U.S. dollars for the whole year , which is almost equivalent to the entire foreign exchange settlement volume of a medium-powered country.

According to official data reports Asian traders under the age of 35 are the main force driving the exchange market-this group accounts for about 2/3 of all brokerage clients. In 2019 , the vast majority of these traders had annual incomes of more than $ 40,000.

It is true that the liquidity of Bitcoin and Ethereum is too terrible and has begun to affect the liquidity of global finance. This is where the major central banks are most afraid. And this kind of liquidity is actually formed by the characteristics of blockchain technology, including peer-to-peer transactions and disintermediation. It is an essential advancement in technology relative to traditional transaction systems. We all know how fast the currency circle trades relative to traditional financial accounts, fundamentally, this is not a competition between rabbits and turtles, so there is an essential difference in efficiency, which results in a huge liquidity gap between cryptocurrencies and traditional financial legal currencies.

This kind of technological gap can be suppressed by policies in the short term, but it is clear that at least the traditional legal currency and financial system have to deal with this challenge fundamentally. The two paths to resolve this challenge are obviously central bank digital currency or fiat currency on-chain stable currency.

Generally speaking, people in the currency circle simply think that what fiat currency cannot solve is the "inflation" problem. The government will continue to issue more fiat currencies, causing the depreciation of fiat currencies. In the long run, Bitcoin's anti-inflation property is precisely the problem. In fact, central banks are also aware of this solid logic. Whether it is digital fiat currency or stable currency, if the inflation problem is not solved, it will not be able to overwhelm cryptocurrencies like Bitcoin in the long run . However, starting from the digital legal currency and applying the same blockchain technology, central banks have a new idea, which is to replace the "over-issued legal currency" with "enhanced liquidity" .

This is the reason that cryptocurrencies face the suppression of big powers. Of course, i do not believe that central bank digital currencies can kill cryptocurrencies.