How can Bitcoin coexist with future Central Bank Digital Currencies (CBDCs)? Are they competitors, or can they be complementary?

The Coexistence Relationship Between Bitcoin and Central Bank Digital Currency (CBDC)

Bitcoin is a decentralized cryptocurrency based on blockchain technology, emphasizing anonymity, limited supply (21 million coins), and its function as a store of value. Central Bank Digital Currency (CBDC) is a digital form of fiat currency issued by central banks, characterized by centralized management, stability, and broad applicability in payments. The two can coexist in the future financial system, though their relationship is complex—both competitive and complementary.

Possibility of Coexistence

Divergent Technological Foundations: Bitcoin uses a public blockchain, emphasizing decentralization; CBDCs typically rely on permissioned or hybrid systems controlled by central banks. This allows them to operate independently in their respective domains.
Diverse User Needs: Bitcoin attracts users seeking asset preservation and inflation resistance; CBDCs serve daily transactions, financial inclusion, and government policy implementation. Both can fulfill different scenarios.
Regulatory Frameworks: CBDCs are governed by national laws, while Bitcoin is recognized as an asset rather than currency in some jurisdictions. Regulatory differences create space for coexistence.

Competitive Dynamics

Payment Sphere: CBDCs offer efficient, low-cost real-time payment systems (e.g., cross-border transfers), potentially diminishing Bitcoin’s role as a payment tool.
Store of Value: CBDC stability (pegged to fiat) may appeal to risk-averse users, challenging Bitcoin’s status as "digital gold."
Market Impact: Widespread CBDC adoption could reduce Bitcoin’s trading volume and liquidity, especially within mainstream financial systems.

Complementary Aspects

Functional Synergy: Bitcoin serves as a decentralized asset for long-term investment and hedging; CBDCs, as extensions of fiat currency, optimize daily economic activities and policy transmission (e.g., stimulus distribution).
Technological Innovation: Bitcoin drives blockchain advancements, offering technical references for CBDCs; CBDC compliance frameworks can standardize the cryptocurrency ecosystem.
Global Collaboration: In cross-border scenarios, Bitcoin may facilitate informal settlements, while CBDCs handle official channels, forming a layered system.

Conclusion

Overall, the relationship between Bitcoin and CBDC leans more toward complementarity than competition. CBDCs strengthen the digitization of traditional financial systems, while Bitcoin maintains its unique position as an independent store of value. In the future, both may coexist harmoniously across different user groups and application scenarios, jointly advancing the diversified development of the digital currency ecosystem.