Author: JuCoin
Introduction
On March 7, 2025, US President Trump signed an executive order to list Bitcoin as a national strategic reserve asset. Behind this decision is the transformation of Bitcoin from a geek toy to a trillion-dollar asset over 16 years, and the evolution of centralized exchanges (CEX) from the grassroots era to compliance giants. This article will take the development of Bitcoin as the main line, deeply analyze its path to becoming a national strategic reserve asset, and explore the key role played by centralized exchanges in this process.
1. The birth of Bitcoin and the wild growth of early exchanges (2008-2013)
1. Satoshi Nakamoto's subversive experiment
When the global financial crisis broke out in 2008, a mysterious figure with 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, with the front-page headline of The Times "Chancellor on the brink of a second round of banking bailout" embedded in the block, directly pointing out the shortcomings of the traditional financial system.
Key data:
Bitcoin price in 2009: 0 US dollars (no trading market)
First transaction in 2010: 10,000 BTC for 2 pizzas (worth about 41 US dollars)
Peak in June 2011: 31.9 US dollars (early speculative bubble)
2. The rise and hidden dangers of centralized exchanges
In July 2010, Japan’s Mt. Gox exchange went online and quickly became the world’s largest Bitcoin trading platform. By 2013, it accounted for 70%-80% of the total transaction volume on the entire network, with a maximum daily transaction volume of about $100 million (estimated at the peak of $1,000/BTC in November). At the same time, the Chinese exchange market began to sprout - JuCoin, founded in 2013, emerged with its localized operations and became one of China's major trading platforms by 2015.
However, security risks have already emerged:
June 2011 hacker incident: In June 2011, a hacker attack resulted in the theft of about 2,609 BTC (worth about $80,000 at the time), and the price fell to $0.01 at one point, suspending trading for a week.
2013 DDoS attack: The exchange went down multiple times, and users were unable to withdraw cash, causing market panic.
Exchange landscape (2013):
Mt. Gox market share: 70%-80%
Other major platforms: Bitstamp (Europe), BTC China (China), JuCoin (China)
Average daily trading volume of global exchanges: about 100,000 BTC (about 50 million US dollars at an average price of 500 US dollars)
3. Enlightenment from the early market Centralized exchanges have solved the problem of Bitcoin liquidity, but their vulnerabilities are exposed: technical defects, regulatory vacuum, and user asset custody risks have become the three major pain points of the industry. Despite this, the market value of Bitcoin exceeded $10 billion in November 2013, indicating that its financial attributes began to emerge.
II. Industry Pain Period: Exchange Crisis and Regulatory Awakening (2014-2017)
1. Mt. Gox Collapse: Collapse 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 circulation at the time. Subsequent investigations showed that the main reasons were chaotic management of cold and hot wallets, internal personnel stealing, and long-term unrepaired code vulnerabilities. This incident caused the price of Bitcoin to plummet by 80%, and the daily trading volume of global exchanges shrank to less than 10,000 BTC.
Chain reaction:
Japanese police arrested Mt. Gox CEO Mark Karpelès
New York State launched BitLicense, requiring exchanges to meet anti-money laundering (AML) and capital reserve requirements
The concept of decentralized exchange (DEX) has emerged, but is limited by technical bottlenecks (such as the Ethereum The DAO incident in 2016)
2. Compliance wave and institutional exploration
In 2015, Coinbase obtained the first BitLicense in New York State and launched institutional custody services; in 2017 In 2015, the Chicago Mercantile Exchange (CME) launched Bitcoin futures, with a first-day trading volume of $460 million. During this period, exchanges showed two major trends: Regional differentiation: China's three major exchanges (Huobi, OKEx, and Binance) occupied the Asian market. In 2015, JuCoin rose rapidly and became one of the major platforms in Asia, with a significant increase in daily trading volume. Technical upgrade: Binance pioneered the "platform coin" model (BNB) and raised $15 million through ICO in July 2017; JuCoin launched financial services and liquidity mining at the same time to explore ecological competition.
Key data (2017):
Peak value of Bitcoin: $326 billion
Average daily trading volume of global exchanges: 500,000 BTC (worth about $25 billion at the time)
The number of Coinbase users exceeded 10 million, with a valuation of $1.6 billion
3. Fork trend and the authority of exchanges
August 2017 In June, Bitcoin split into Bitcoin Cash (BCH) due to a dispute over capacity expansion, and exchanges became the core battlefield for pricing of forked coins: Binance, Huobi and other platforms were the first to launch BCH transactions, with a single-day increase of more than 200%.
III. Mainstream breakthrough: Exchange compliance and financial innovation (2018-2021)
1. Exchange security battle
From 2018 to 2020, hacker attacks caused exchanges to lose more than 3 billion US dollars, forcing the industry to upgrade risk control:
7,000 BTC were stolen from Binance in 2019: SAFU fund was launched (10% transaction fee income as insurance pool)
Coinbase was listed on Nasdaq: After its listing, Coinbase disclosed that it held a large amount of BTC, the specific scale of which was not disclosed, with a valuation of 85 billion US dollars.
JuCoin's response strategy: Introducing multi-signature cold wallets and real-time on-chain asset audits.
Custodian market landscape (2021):
Professional custodians: Coinbase Custody (assets worth $50 billion), Grayscale Trust ($40 billion)
Exchange self-custody: Binance cold wallet reserves more than hundreds of thousands of BTC, JuCoin deploys Web3 hardware (such as JuOne mobile phone) to enhance asset security
2. Explosion of derivatives market and entry of institutions
In 2020, the open interest of CME Bitcoin futures exceeded $4 billion, and companies such as MicroStrategy and Tesla announced that they would include Bitcoin in their balance sheets. The exchange launched innovative products:
Binance Futures: Up to 125x leverage, daily trading volume peak of US$37 billion
JuCoin Contract Service: Launched 0 slippage, 0 pin insurance mechanism, KYC-free design to attract global users
Market value and trading volume (November 2021):
Bitcoin market value: US$1.3 trillion (surpassing Meta and Tencent)
Average daily trading volume of global exchanges: US$80 billion (spot) + 2000 Billions of dollars (derivatives) 3. Heavy regulation and industry cleanup In 2021, China completely banned cryptocurrency trading, Huobi and OKEx withdrew from the mainland market; the US SEC sued Ripple and determined that XRP was a security. Compliant exchanges accelerate layout: Binance sets up regional headquarters (Dubai, Paris): abandons anonymous coins and removes leveraged tokens JuCoin transformation: upgraded to "the world's first service-oriented exchange" after being acquired in 2024, focusing on the Web3+AI track and launching a $100 million industry innovation fund 4. Strategic reserve assets: The collision between Bitcoin and the national financial system (2022-2024) 1. The logic and challenges of Trump's policies Trump promotes Bitcoin as a strategic reserve of the United States, mainly based on the following factors: list-paddingleft-2">
Hedge against the dollar credit crisis: U.S. national debt exceeds $35 trillion, and the 21 million bitcoin limit has anti-inflation properties.
Struggle for digital hegemony: China's central bank digital currency (DC/EP) has been tested in cross-border settlement, and Bitcoin can complement the dollar system.
Voter rejuvenation strategy: 25% of Americans aged 18-35 hold cryptocurrencies (Pew Research Center data).
Implementation challenges:
Legal obstacles: There is no federal unified recognition of whether Bitcoin is "property".
Market volatility: Bitcoin’s annualized volatility exceeds 60%, far exceeding gold (15%).
Custody security: National reserves require a trillion-dollar custody solution, and existing exchange technology is difficult to bear the burden.
2. Reconstruction of the role of exchanges
With Bitcoin entering the national reserve system, centralized exchanges will be divided into:
Compliance custodians: Coinbase and Kraken have passed bank-level security certification (such as SOC 2) and provide on-chain audit services to the government.
Liquidity market makers: Binance and JuCoin take over the central bank's buy and sell orders and use high-frequency trading to smooth price fluctuations.
Derivatives hedging platform: Bitcoin options and ETFs launched by CME help the Ministry of Finance manage reserve risks.
Potential market size:
If the United States allocates 1% of its foreign exchange reserves (about 40 billion US dollars), it needs to purchase 400,000 BTC (accounting for 3% of the circulation) through exchanges.
Exchange commission income may increase by 2 billion US dollars per year (calculated at a fee rate of 0.5%).
V. Exchange Security Evolution: From the Bybit Incident to Industry Standard Upgrade
1. Bybit Incident and Industry Reflection
On February 21, 2025, Bybit suffered the largest cryptocurrency theft in history. Ethereum multi-signature cold wallets worth about US$1.5 billion were stolen due to complex front-end interface manipulation attacks.
JuCoin's response:
Introduced the "Asset Proof" system and updated the on-chain reserve data at a high frequency.
Upgraded the hot and cold wallet separation mechanism, and 95% of user assets are stored in multi-signature cold wallets.
2. Standardization trend of security system
Technological progress: Zero-knowledge proof (ZKP) improves the transparency of reserve proof: Major exchanges are actively adopting ZKP technology to prove reserves in a more transparent and user-privacy-protecting way. Exchanges such as Binance and Kraken are developing ZKP-based PoR systems.
AI-driven real-time security monitoring: Artificial intelligence and machine learning technologies are increasingly widely used in exchanges for real-time abnormal transaction detection and threat prevention.
Strengthening supervision: The EU MiCA regulation came into effect, requiring crypto asset service providers (including exchanges) to disclose detailed information on asset custody and security measures.
U.S. regulators are paying more attention: U.S. regulators are significantly increasing their scrutiny of the security of cryptocurrency exchanges and are actively exploring the development of a more complete 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, and jointly promote 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 the Collapse Incident Although the previous exchange crises caused short-term pain, they pushed the industry to develop in a healthier direction:
Mt. Gox (2014) → gave birth to multi-signature wallets and cold storage standards
FTX (2022) → Promote 100% reserve proof and transparency of on-chain assets
Ecosystem expansion: Hardware entrances (such as JuOne mobile phone) and social functions (JuCoin Social) reshape user interaction scenarios.
3. Redefining the strategic value of Bitcoin
Becoming a national reserve, Bitcoin has proved its resilience as "digital gold":
Anti-censorship payment: During the Russian-Ukrainian conflict, Bitcoin became a cross-border donation channel, with a single-day on-chain transfer volume exceeding 100,000.
Asset allocation tool: Global sovereign funds and pension funds hold Bitcoin through Coinbase to hedge against the depreciation of fiat currencies.
Web3 infrastructure: Exchanges become the traffic entrance of the metaverse and NFT ecology, reconstructing the logic of digital asset issuance.
Conclusion: The end of the asymmetric revolution
The rise of Bitcoin is a history of "edge breaking through the center": from darknet transactions to Salvadoran fiat currency, from the ruins of Mt. Gox to the listing of Coinbase, centralized exchanges have always played the role of "necessary evil" - they introduce risks, but also accelerate popularization; they are repeatedly criticized, but evolve in crisis. If Bitcoin is really included in the national strategic reserve, it may be the best annotation of its "anti-fragility": a protocol born from technical experiments may eventually become the cornerstone of reshaping the global monetary order. And exchanges will continue to play the role of "contradiction promoters" in this revolution - both gravediggers of the old system and builders of the new order.
Alex
Miyuki
Catherine
Weiliang
Weatherly