[The Editors' Verdict] The Future of Bitcoin That Even El Salvadorans Don't Trust

[Asia Economy Reporter Myung Jin-gyu] Bitcoin, which was valued as an alternative in the era of hyperinflation last year when it nearly reached $70,000 per coin, has plummeted to the $30,000 level. The price of stablecoins, which were pegged to the dollar and considered relatively safe assets, has also fallen below $1, raising concerns that the massive market created by virtual assets could collapse.

Optimists still claim that virtual assets will surpass physical assets and that Bitcoin will replace currency, but the future is not promising.

Let’s look at the reality in El Salvador, which adopted Bitcoin as legal tender last September. The National Bureau of Economic Research released the results of a survey conducted in February interviewing 1,800 adults in El Salvador about their Bitcoin usage behavior. The survey found that 32% of all respondents said they did not know about the government-distributed Bitcoin wallet, “Chivo Wallet.”

After using Bitcoin, cash and existing debit/credit card usage remained unchanged. 70% of all users said their cash usage was the same as before, and 83% said their debit/credit card usage was unchanged. Companies based in El Salvador showed a similar situation. Only 20% of companies handled Bitcoin. Only 11.4% of companies planned to buy goods with Bitcoin. Although it is somewhat early to declare failure, El Salvador’s experiment with Bitcoin as legal tender is being thoroughly ignored by both citizens and companies.

In April, the 19 millionth Bitcoin was mined. Bitcoin is created through a process called mining, with a total of only 21 million coins to be generated. Over 90% of the total mining volume has been reached. The remaining Bitcoins are about 2 million, and by around 2030, 99% of Bitcoins will have been mined, effectively ending the mining activity. The point at which all 21 million Bitcoins will be mined is scheduled for 2140. Therefore, after 2030, the Bitcoins that can be mined over more than 100 years will be only 1% of the total, about 210,000 coins.

Mining refers to the act of participating in the Bitcoin blockchain network to verify the validity of transactions that have occurred and to notify all network participants. In this process, those who participate in mining receive Bitcoin and transaction fees as rewards.

The problem arises when the mining process is effectively over. Someone still needs to perform mining work to maintain the Bitcoin ecosystem. However, even if they mine diligently, they will no longer receive new Bitcoins. They can only collect transaction fees. Therefore, after 2030, the transaction fees earned through mining must exceed the profits from Bitcoin creation for mining to be feasible. Ultimately, for the Bitcoin ecosystem to be maintained, it must satisfy both conditions: Bitcoin must be widely used as currency or recognized for its scarcity, causing its value to soar.

In his book Currency Wars, Song Hongbing pointed out that international financial tycoons print money themselves, assign value to it, and control global wealth. The Spanish series La Casa de Papel (Money Heist), which became a sensation on Netflix, depicted a story about thieves who occupied a mint that was recklessly printing euros to stimulate the economy and printed 980 million euros themselves before escaping.

The virtual asset market is exactly like that. Everyone mints digital coins, but the only ones who accumulate enormous wealth are the issuers and exchanges. Although the era and actors are different, history is still repeating itself.

This content was produced with the assistance of AI translation services.