China Industrial and Commercial Bank (ICBC) recently released a report praising Bitcoin and Ethereum as innovative financial assets. The bank emphasized the rapid development and increasing diversification of digital currencies, comparing Bitcoin to gold and referring to Ethereum as “digital oil.”
The ICBC report highlighted the exponential growth of digital currency types and applications driven by human imagination, as noted by historian Yuval Noah Harari. The report outlined the different development paths of various digital currencies, each of which meets unique needs within the financial ecosystem.
Bitcoin was credited with maintaining scarcity similar to gold through its mathematical consensus mechanism, addressing issues related to divisibility, authenticity verification, and portability. While the currency attributes of Bitcoin may be weakening, its status as an asset is consolidating.
On the other hand, Ethereum was positioned as providing the technical power for the digital future and serving as the “digital oil” powering numerous applications in the entire Web3 ecosystem. Unlike Bitcoin, Ethereum combines Turing completeness through its proprietary programming language Solidity and its virtual machine EVM.
The report also emphasized the crucial role stablecoins play in bridging the gap between the digital currency market and the real world, providing stability in the volatile cryptocurrency market. Central bank digital currencies (CBDCs) represent a significant innovation in the modern monetary system, enhancing payment system efficiency, reducing transaction costs, and strengthening the effectiveness of monetary policy.
While each digital currency has a different development vision, the overarching goal is to improve financial inclusivity, security, and payment efficiency. With the continuous expansion of digital currencies, developers and policymakers need to focus on balancing sustainability, security, and efficiency.