Can Bitcoin challenge the value status of Central Bank Digital Currencies (CBDCs)?

This is an interesting question, like asking "Can gold challenge the status of the RMB?" The answer is: they are quite different, playing different games, yet somewhat related.

Let me try to explain it in simple terms.

What is Central Bank Digital Currency (CBDC)? You can think of it as an "electronic version of the RMB" issued directly to you by the central bank. It feels very similar to the money you use in WeChat Pay or Alipay now, but it's fundamentally different. The money in WeChat Pay and Alipay is a deposit in commercial banks (like ICBC or CCB), which you simply spend through an app. Central Bank Digital Currency, however, means you directly hold the central bank's "money," bypassing commercial banks. Its value is 1:1 exchangeable with physical cash, backed by state credit, and very stable. In short, it is official, digitized legal tender.

What is Bitcoin? Bitcoin is more like "digital gold." It is not issued by any country or institution, and its total supply is capped at 21 million, which no one can increase. Its value comes from collective consensus—it has value because we believe it has value. Its characteristics are decentralization, anonymity, and limited supply.

So, can Bitcoin challenge Central Bank Digital Currency?

From the perspective of "everyday spending," it's largely impossible.

1. Value Instability: Bitcoin's price fluctuates too wildly. Today, one coin might buy a car; tomorrow, it might only be enough for a computer. You wouldn't want your salary to halve overnight, would you? Central Bank Digital Currency, however, is stable; one yuan is one yuan.
2. Slow Transaction Speed: The Bitcoin network can process a very limited number of transactions per second. Buying a coffee might require waiting several minutes or even longer for confirmation, which is unacceptable in daily life. CBDCs are designed to handle massive, high-concurrency transactions.
3. Official Stance: No major country would abandon its monetary sovereignty to use something it cannot control as the national currency. Issuing CBDCs is precisely to strengthen the state's control over currency, not to weaken it.

However, from the perspective of "store of value" and "complement to the financial system," Bitcoin presents both a challenge and a possibility.

1. Safe-haven Asset: When people lose confidence in their national currency or face severe inflation, some choose to convert assets into gold to preserve value. Due to its global circulation and limited supply, Bitcoin also plays a similar role as "digital gold." It offers people an asset option not controlled by a single government.
2. Check on the Existing System: While Central Bank Digital Currency is convenient, it also implies stronger centralized control. Theoretically, every transaction you make could be recorded, and your funds could be easily frozen. Bitcoin's existence is like a "Plan B"; it represents a form of freedom, a right to "control my own assets." This idea itself is a challenge to the traditional financial system.

To summarize:

You can understand it this way:

• Central Bank Digital Currency is "official electronic cash" designed to make spending more convenient and secure, and it will become mainstream in our lives.
• Bitcoin is more like an investment or a safe-haven asset, akin to "digital gold" in the digital world. It won't become mainstream "money," but its status as an alternative asset for value storage will be difficult for CBDCs to replace.

Therefore, it's highly probable that they will coexist long-term: one operating "in the halls of power" for national economy and people's livelihoods, and the other "in the jianghu" (referring to the unofficial, often alternative sphere) as a store of value and a complement to the existing system. They are not direct competitors because they fulfill different levels of needs.