In the ever-evolving world of finance, few assets have sparked as much debate, fascination, and transformation as Bitcoin. Some have become overnight millionaires, while others have lost everything chasing its volatile waves. Behind the headlines and hype lies a deeper truth: Bitcoin is not just another investment vehicle—it’s a milestone in the evolution of money itself.
Understanding Bitcoin goes beyond analyzing price charts or predicting market swings. It requires a fundamental shift in how we perceive value, trust, and financial systems. To truly grasp its significance, we must zoom out and examine the broader monetary cycle, identify where we stand within it, and learn how to navigate the smaller investment cycles embedded within.
To unpack this complex yet critical topic, renowned economist Professor Xu Yuan from the National School of Development at Peking University joined the Xiangshuai Reading Club. Drawing from his groundbreaking new book, The Milestone of Money: The Economic Logic of Digital Currency, Professor Xu offers a powerful framework for understanding the rise of cryptocurrencies—not as speculative fads, but as inevitable outcomes of economic evolution.
The Evolutionary Leap: Why Bitcoin Is a Monetary Milestone
Money has always evolved in response to technological and societal shifts. From barter to coins, paper to digital banking, each transformation solved a critical problem: scalability, trust, or efficiency.
Bitcoin represents the next leap—an answer to the growing crisis of centralized trust. In an era of inflation, geopolitical instability, and centralized monetary policies that benefit the few, Bitcoin introduces a decentralized alternative: digital scarcity.
Unlike fiat currencies that can be printed infinitely, Bitcoin has a hard cap of 21 million coins. This artificial scarcity mimics precious metals like gold but with superior portability, divisibility, and verifiability through blockchain technology.
👉 Discover how digital scarcity is reshaping the future of value storage.
This isn't just innovation for innovation’s sake—it's a response to real-world economic imbalances. As global debt soars and central banks expand balance sheets, Bitcoin emerges as a hedge against systemic risk.
Decoding the Big Picture: The Macro Cycle of Money
To invest wisely in Bitcoin, we must first understand the macro cycle of money—the long-term shifts in monetary systems driven by technology, policy, and public trust.
We are currently in a phase marked by:
- Monetary expansion: Central banks injecting liquidity
- Currency devaluation: Eroding purchasing power due to inflation
- Digital transformation: Governments exploring CBDCs (Central Bank Digital Currencies)
- Decentralization demand: Growing public skepticism toward financial institutions
These forces create fertile ground for decentralized digital assets. Bitcoin thrives not because it's "cool," but because it fulfills a real economic need: a neutral, borderless, censorship-resistant store of value.
Investors who recognize this macro trend early position themselves not just for gains, but for resilience in an uncertain financial future.
Riding the Investment Cycle: Timing Matters
While the macro trend favors Bitcoin adoption, short-term volatility remains intense. Prices can swing 30% in weeks—or even days. That’s why understanding the investment cycle is crucial.
Bitcoin follows a rough four-year cycle tied to its halving events, when mining rewards are cut in half. Historically:
- Pre-halving (accumulation): Prices stagnate; smart money buys
- Post-halving (growth): Increased scarcity fuels upward momentum
- Peak (euphoria): Media frenzy; retail investors enter
- Correction (capitulation): Sharp drop; weak hands exit
Recognizing these phases allows investors to avoid emotional decisions. Buying during accumulation and holding through volatility often yields the best returns.
But timing isn't everything—behavior matters more. Panic selling during dips or FOMO buying at peaks destroys wealth. Discipline, patience, and education are your true edge.
Beyond Speculation: Building a Crypto-Informed Mindset
True mastery of Bitcoin investing isn’t about catching every pump. It’s about developing a crypto-informed mindset—one that sees beyond price to the underlying technology and economic logic.
Ask yourself:
- What problem does Bitcoin solve?
- Who benefits from its existence?
- How does it compare to traditional assets like gold or bonds?
- What risks does it face—regulatory, technical, adoption-related?
Answering these questions builds conviction. And conviction enables you to hold through turbulence.
👉 Learn how to build a long-term crypto strategy that withstands market storms.
This mindset shift separates casual traders from informed investors—those who don’t just participate in the cycle but anticipate it.
Frequently Asked Questions (FAQ)
Q: Is Bitcoin really “digital gold”?
A: Yes—in principle. Like gold, Bitcoin is scarce and hard to produce. Unlike gold, it’s easily transferable across borders and verifiable in real time. While still maturing as an asset class, its role as a decentralized store of value aligns closely with gold’s historical function.
Q: How often do Bitcoin halvings occur?
A: Approximately every four years, or after every 210,000 blocks are mined. The next halving is expected in 2024, reducing block rewards from 6.25 to 3.125 BTC.
Q: Can governments ban Bitcoin?
A: They can restrict its use within their borders, but banning it entirely is nearly impossible due to its decentralized nature. Even in restrictive regimes, peer-to-peer trading persists.
Q: Should I invest in Bitcoin if I’m risk-averse?
A: Not fully—but consider allocating a small portion (e.g., 1–5%) of your portfolio. Think of it as venture exposure to monetary innovation rather than a core holding.
Q: Does Bitcoin have intrinsic value?
A: Its value comes from network consensus and utility—scarcity, security, and global accessibility. Like fiat money or collectibles, value is socially agreed upon, not physically inherent.
Q: How do I store Bitcoin safely?
A: Use hardware wallets for large amounts. Avoid keeping significant holdings on exchanges. Enable two-factor authentication and back up recovery phrases offline.
Preparing for the Future: Becoming a Future-Ready Investor
The future of money is being rewritten. Central banks are digitizing currencies. Tech giants are exploring payment ecosystems. Meanwhile, Bitcoin continues gaining legitimacy—adopted by nations like El Salvador and integrated into corporate treasuries like MicroStrategy’s.
To stay ahead:
- Stay informed: Follow developments in blockchain, regulation, and macroeconomics.
- Diversify intelligently: Balance high-potential assets like Bitcoin with stable investments.
- Think long-term: Focus on structural trends, not daily noise.
Bitcoin may not replace all forms of money—but it has already proven it belongs in the financial ecosystem.
👉 See how early adopters are positioning themselves for the next phase of digital finance.
Final Thoughts: A New Chapter in Financial History
Bitcoin is more than code or currency—it’s a symbol of changing trust paradigms. It challenges us to rethink what money is and who controls it.
By understanding the macro cycle of monetary evolution and mastering the micro cycle of investment timing, you equip yourself not just to survive volatility—but to thrive within it.
As Professor Xu Yuan’s work reminds us: we’re not just witnessing history; we’re being invited to shape it.
Are you ready to cross the milestone?