The Value Competition Between National Fiat Currencies and Bitcoin

Let's put it this way, this matter is actually quite easy to understand.

You can imagine a country's sovereign currency (like the RMB or US dollar) as "stock" or "shopping vouchers" issued by a super-large company (the country itself). Where does its value come from? Primarily from people's trust in this "company." As long as the country is stable, its economy is developing well, and everyone trusts the government, then this "shopping voucher" is valuable. You can use it to buy things, pay taxes, and everyone accepts it. The government is its issuer and guarantor, and it can regulate its quantity and value by printing money (quantitative easing) or raising interest rates.

Bitcoin, on the other hand, is more like "digital gold." Behind it, there is no country, no government, and no company called "Bitcoin." Its value comes from several very unique aspects:

Scarcity: The total supply of Bitcoin is constant, hardcoded at 21 million, and no one can change that. This is like gold; the Earth's reserves are limited, and once it's mined, it's gone. When something is scarce and more people want it, it naturally gains value.
Consensus: A large group of people worldwide believe in it, use it, and are willing to buy it with money, forming a "consensus" that it is valuable. The larger this consensus network, the more solid its value foundation becomes.
Decentralization: It is not controlled by any single institution. This means no one can arbitrarily "print" more Bitcoin, nor can anyone freeze your Bitcoin account (as long as you keep your private key safe). This "my property, my control" characteristic is very appealing at times.

So, what is their competitive relationship?

At its core, it's a "competition of trust."

In a country with a stable economy and reliable monetary policy, most people naturally trust their national fiat currency more. It's convenient to use, and its value is relatively stable (what buys a pound of pork today will buy roughly the same tomorrow). You wouldn't use Bitcoin to buy groceries because its price fluctuates too much; it might rise or fall by 10% in the very second you're paying. In such an environment, Bitcoin primarily plays the role of an investment product, similar to gold or stocks, an option for asset allocation, rather than a direct competitor to currency.

However, if a country's government is unreliable, printing money recklessly leads to severe inflation (money becoming less and less valuable), and people's savings erode day by day. At this point, people's "trust" in their national currency collapses. What do people do to protect their assets from shrinking? They quickly convert their money into things that retain value better, such as US dollars or gold.

And Bitcoin, due to its constant supply and independence from any government control, becomes a new option for these people. In such circumstances, Bitcoin transforms from an "investment product" into a "safe-haven asset," directly entering fierce competition with that country's sovereign currency. People would rather trust a cold, neutral algorithm than an irresponsible government. This situation has occurred in countries like Venezuela and Argentina, where many people use Bitcoin to protect their wealth.

So, to summarize:

In places of peace, stability, and economic prosperity, national currency is the absolute protagonist, handling daily transactions; Bitcoin is more like a supporting character, a high-risk alternative investment product. They are "like well water and river water, not interfering with each other" or rather, a "complementary relationship."
In places of turmoil and economic collapse, where national currency credit has failed, Bitcoin's "decentralization" and "scarcity" become prominent. It emerges as a powerful "challenger," competing with sovereign currency for the role of "store of value."

Simply put, wherever you feel more secure keeping your money, that's who you trust more. This is the most fundamental competitive relationship between them.