From "Digital Bubble" to National Strategic Reserve Asset, the 16-Year Evolution of Bitcoin

CN
3 days ago

This article will take the development history of Bitcoin as the main line, deeply analyzing its evolution into a national strategic reserve asset and exploring the key role played by centralized exchanges in this process.

Introduction

On March 7, 2025, U.S. President Trump signed an executive order designating Bitcoin as a national strategic reserve asset. Behind this decision is Bitcoin's transformation over 16 years from a geek toy to a trillion-dollar market asset, as well as the evolution of centralized exchanges (CEX) from a rough era to compliant giants.

This article will take the development history of Bitcoin as the main line, deeply analyzing its evolution into a national strategic reserve asset and exploring the key role played by centralized exchanges in this process.

I. The Birth of Bitcoin and the Wild Growth of Early Exchanges (2008-2013)

1. Satoshi Nakamoto's Disruptive Experiment

At the onset of the 2008 global financial crisis, a mysterious figure using the pseudonym "Satoshi Nakamoto" published the "Bitcoin White Paper," proposing an electronic cash system that does not rely on centralized institutions. On January 3, 2009, the Bitcoin genesis block was born, embedding the headline from The Times: "Chancellor on brink of second bailout for banks," directly pointing to the flaws of the traditional financial system.

Key Data:

  • Bitcoin price in 2009: $0 (no trading market)
  • First transaction in 2010: 10,000 BTC exchanged for 2 pizzas (worth about $41)
  • Peak in June 2011: $31.9 (early speculative bubble)

2. The Rise and Risks of Centralized Exchanges

In July 2010, the Japanese exchange Mt. Gox went online, quickly becoming the largest Bitcoin trading platform in the world. By 2013, it accounted for 70%-80% of the total trading volume, with a single-day peak trading volume of about $100 million (estimated based on a peak of $1,000/BTC in November). Meanwhile, the Chinese exchange market began to sprout—JuCoin, established in 2013, gained prominence through localized operations and became one of China's major trading platforms by 2015.

However, security risks were already apparent:

  • June 2011 hacking incident: A hacker attack in June 2011 led to the theft of about 2,609 BTC (worth about $80,000 at the time), causing the price to drop to $0.01 and trading was suspended for a week.
  • 2013 DDoS attacks: Exchanges experienced multiple outages, preventing users from withdrawing funds and causing market panic.

Exchange Landscape (2013):

  • Mt. Gox market share: 70%-80%
  • Other major platforms: Bitstamp (Europe), BTC China (China), JuCoin (China)
  • Global exchange daily trading volume: about 100,000 BTC (approximately $50 million at an average price of $500)

3. Insights from the Early Market

Centralized exchanges solved the liquidity problem of Bitcoin, but their vulnerabilities were laid bare: technical flaws, regulatory vacuums, and risks of user asset custody became the three major pain points in the industry. Nevertheless, Bitcoin's market value surpassed $10 billion in November 2013, indicating that its financial attributes were beginning to emerge.

II. Industry Growing Pains: Exchange Crises and Regulatory Awakening (2014-2017)

1. The Collapse of Mt. Gox: The Fall of Centralized Trust

In February 2014, Mt. Gox announced the loss of 850,000 Bitcoins (worth $450 million at the time), accounting for 7% of the circulating supply. Subsequent investigations revealed that chaotic management of hot and cold wallets, internal personnel theft, and long-unfixed code vulnerabilities were the main causes. This incident led to an 80% drop in Bitcoin's price, and the global exchange's daily trading volume shrank to less than 10,000 BTC.

Chain Reaction:

  • Japanese police arrested Mt. Gox CEO Mark Karpelès
  • New York State introduced BitLicense, requiring exchanges to meet anti-money laundering (AML) and capital reserve requirements
  • The concept of decentralized exchanges (DEX) emerged, but was limited by technological bottlenecks (e.g., the 2016 Ethereum DAO incident)

2. The Wave of Compliance and Institutional Exploration

In 2015, Coinbase obtained the first BitLicense in New York and launched institutional custody services; in 2017, the Chicago Mercantile Exchange (CME) launched Bitcoin futures, with a first-day trading volume of $460 million. During this period, exchanges exhibited two major trends:

  • Regional differentiation: The three major exchanges in China (Huobi, OKEx, Binance) dominated the Asian market, with JuCoin rapidly rising in 2015 to become one of the major platforms in Asia, significantly increasing daily trading volume.
  • Technological upgrades: Binance pioneered the "platform token" model (BNB), raising $15 million through an ICO in July 2017; JuCoin simultaneously launched wealth management services and liquidity mining, exploring ecological competition.

Key Data (2017):

  • Bitcoin market value peak: $326 billion
  • Global exchange daily trading volume: 500,000 BTC (worth about $25 billion at the time)
  • Coinbase user count surpassed 10 million, with a valuation of $1.6 billion

3. The Forking Tide and the Power of Exchanges

In August 2017, Bitcoin split into Bitcoin Cash (BCH) due to scaling disputes, with exchanges becoming the core battleground for pricing the forked coins:

  • Platforms like Binance and Huobi were the first to list BCH trading, with daily increases exceeding 200%.

III. Mainstream Breakthrough: Exchange Compliance and Financial Innovation (2018-2021)

1. The Security Battle of Exchanges

From 2018 to 2020, hacker attacks led to losses exceeding $3 billion for exchanges, forcing the industry to upgrade risk control:

  • In 2019, Binance was hacked for 7,000 BTC: it launched the SAFU fund (10% of trading fee revenue as an insurance pool).
  • Coinbase went public on Nasdaq: after its listing, Coinbase disclosed holding a large amount of BTC, though the specific scale was not made public, with a valuation of $85 billion.

- JuCoin's response strategy: introduced multi-signature cold wallets and real-time on-chain asset audits.

Custody Market Landscape (2021):

  • Professional custody institutions: Coinbase Custody (asset scale of $50 billion), Grayscale Trust ($40 billion)
  • Exchange self-custody: Binance's cold wallet reserves exceed hundreds of thousands of BTC, JuCoin is laying out Web3 hardware (such as the JuOne phone) to enhance asset security.

2. The Explosion of the Derivatives Market and Institutional Entry

In 2020, CME Bitcoin futures open interest exceeded $4 billion, with companies like MicroStrategy and Tesla announcing they would include Bitcoin on their balance sheets. Exchanges launched innovative products:

  • Binance contracts: up to 125x leverage, with a peak daily trading volume of $37 billion
  • JuCoin contract services: launched zero slippage and zero pin insurance mechanisms, with a no-KYC design to attract global users

Market Value and Trading Volume (November 2021):

  • Bitcoin market value: $1.3 trillion (surpassing Meta and Tencent)
  • Global exchange daily trading volume: $80 billion (spot) + $200 billion (derivatives)

3. Regulatory Crackdown and Industry Cleanup

In 2021, China completely banned cryptocurrency trading, with Huobi and OKEx exiting the mainland market; the U.S. SEC sued Ripple, deeming XRP a security. Compliant exchanges accelerated their layouts:

  • Binance established regional headquarters (Dubai, Paris): abandoned anonymous coins and delisted leveraged tokens - JuCoin's transformation: after being acquired in 2024, it upgraded to "the world's first service-oriented exchange," focusing on the Web3+AI track and launching a $100 million industry innovation fund.

IV. Strategic Reserve Asset: The Collision of Bitcoin and the National Financial System (2022-2024)

1. The Logic and Challenges of Trump's Policy

Trump's push for Bitcoin to become a U.S. strategic reserve is primarily based on the following factors:

  • Hedging against the dollar credit crisis: U.S. national debt has exceeded $35 trillion, while Bitcoin's cap of 21 million coins has anti-inflation properties.
  • Competing for digital hegemony: The People's Bank of China has already tested its digital currency (DC/EP) in cross-border settlements, and Bitcoin could serve as a supplement to the dollar system.
  • Young voter strategy: Among Americans aged 18-35, 25% hold cryptocurrencies (Pew Research Center data).

Implementation challenges:

  • Legal barriers: There is no federal uniform determination on whether Bitcoin qualifies as "property."
  • Market volatility: Bitcoin's annualized volatility exceeds 60%, far surpassing gold (15%).
  • Custody security: National reserves require trillion-dollar-level custody solutions, which existing exchange technologies struggle to support.

2. The Restructuring of Exchange Roles

As Bitcoin enters the national reserve system, centralized exchanges will differentiate into:

  • Compliant custodians: Coinbase and Kraken provide on-chain audit services for the government through bank-level security certifications (e.g., SOC 2).
  • Liquidity market makers: Binance and JuCoin handle central bank buy and sell orders, using high-frequency trading to smooth price fluctuations.
  • Derivatives hedging platforms: CME's Bitcoin options and ETFs help the Treasury manage reserve risks.

Potential market size:

  • If the U.S. adds 1% to its foreign exchange reserves (about $40 billion), it would need to purchase 400,000 BTC through exchanges (accounting for 3% of the circulating supply).
  • Exchange commission revenue could increase by $2 billion annually (calculated at a 0.5% fee rate).

V. The Evolution of Exchange Security: From the Bybit Incident to Industry Standard Upgrades

1. The Bybit Incident and Industry Reflection

On February 21, 2025, Bybit experienced the largest cryptocurrency theft in history, with approximately $1.5 billion worth of Ethereum stolen from a multi-signature cold wallet due to a complex front-end interface manipulation attack.

  • JuCoin's response:

  • Launched an "asset proof" system, frequently updating on-chain reserve data.

  • Upgraded the cold and hot wallet separation mechanism, with 95% of user assets stored in multi-signature cold wallets.

2. The Standardization Trend of Security Systems

  • Technological advancements: Zero-Knowledge Proof (ZKP) enhances the transparency of reserve proof: major exchanges are actively adopting ZKP technology to conduct reserve proof in a more transparent manner while protecting user privacy. Exchanges like Binance and Kraken are developing ZKP-based PoR systems.

  • AI-driven real-time security monitoring: Artificial intelligence and machine learning technologies are increasingly being applied in exchanges for real-time anomaly transaction detection and threat prevention.

  • Strengthened regulatory efforts: The EU MiCA regulation has come into effect, requiring crypto asset service providers (including exchanges) to disclose detailed information about asset custody and security measures.

  • Increased scrutiny from U.S. regulators: U.S. regulatory agencies are significantly ramping up their scrutiny of cryptocurrency exchange security and actively exploring the establishment of a more comprehensive regulatory framework.

  • Industry Collaboration: Major exchanges in the industry, such as JuCoin and security companies, are actively collaborating to share threat intelligence and security best practices, jointly promoting the development of open-source security programs in the cryptocurrency field.

VI. Reflection and Outlook: The Paradox and Evolution of Centralized Exchanges

1. The Positive Significance of Closure Events

While each exchange crisis has caused short-term pain, it has pushed the industry toward a healthier direction:

  • Mt. Gox (2014) → Led to the emergence of multi-signature wallets and cold storage standards.
  • FTX (2022) → Promoted 100% reserve proof and on-chain asset transparency.
  • Bybit (2025) → Exchanges accelerated the upgrade of security protocols, such as adopting stricter multi-factor authentication, end-to-end transaction verification, and isolated signature infrastructure. Third-party services (like Safe{Wallet}) face stricter audits, and supply chain security has become a focal point.

2. Core Propositions for the Next Decade

  • Technological Integration: Exchanges integrate DEX liquidity (e.g., JuCoin plans to launch a cross-chain DEX) to balance efficiency and decentralization.
  • Regulatory Collaboration: The implementation of the FATF "Travel Rule," with exchanges like JuCoin adapting to local compliance requirements through the "Global Hub Program."
  • Ecosystem Expansion: Hardware entry points (like the JuOne phone) and social features (JuCoin Social) reshape user interaction scenarios.

3. Redefining the Strategic Value of Bitcoin

As a national reserve, Bitcoin has proven its resilience as "digital gold":

  • Censorship-Resistant Payments: During the Russia-Ukraine conflict, Bitcoin became a channel for cross-border donations, with daily on-chain transaction volumes exceeding 100,000.
  • Asset Allocation Tool: Global sovereign funds and pension funds hold Bitcoin through Coinbase to hedge against fiat currency depreciation.
  • Web3 Infrastructure: Exchanges become traffic entry points for the metaverse and NFT ecosystems, reconstructing the logic of digital asset issuance.

Conclusion: The Endgame of Asymmetrical Revolution

The rise of Bitcoin is a history of "marginal breakthroughs against the center": from dark web transactions to El Salvador's legal tender, from the ruins of Mt. Gox to the listing of Coinbase, centralized exchanges have always played the role of a "necessary evil"—they introduce risks but also accelerate adoption; they are often criticized yet evolve in crises. If Bitcoin is truly incorporated into national strategic reserves, it may be the best annotation of its "anti-fragility": a protocol born from a technological experiment that could ultimately become the cornerstone of reshaping the global monetary order. And exchanges will continue to play the role of "contradictory promoters" in this revolution—both the grave diggers of the old system and the builders of the new order.

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