Author: @zzmjxy

When market sentiment cools, the narrative that "Bitcoin is dead" always resurfaces. The core assumption of this argument is that Bitcoin, as the first generation of blockchain technology, will eventually be replaced by newer technologies, just like the fate of all pioneering technologies in history.

This assumption seems logically sound—but it is wrong.

I. The Curse of First-Generation Technology and the Exception of Bitcoin

The lessons that technological history teaches us are harsh.

Western Union —a telecommunications giant that controlled 90% of the telegraph business in the United States in 1866. In 1876, Bell wanted to sell his telephone patent to them, but the management refused. Bell then founded Bell Telephone, which later evolved into AT&T—the world's largest company in the 20th century. And Western Union, which refused the telephone? Today, it has a market value of $2.7 billion and ranks 3990th in the world.

Intel —which invented the commercial microprocessor in 1971 and dominated the PC chip market for thirty years. At its peak in 2000, during the bubble economy, its market capitalization reached $509 billion. 25 years later, investors who bought at the peak have yet to recoup their investment; its market capitalization is now only $160 billion—less than a third of its peak. It wasn't defeated by "faster CPUs," but rather left behind by generational shifts in architecture (the rise of ARM and TSMC's leading manufacturing processes).

Cisco —the king of internet infrastructure. In 2000, its market capitalization exceeded $500 billion, surpassing Microsoft to become the world's number one. After the bubble burst, its stock price plummeted by 88%. Although its revenue quadrupled afterward, its stock price never returned to its peak. The value at the device layer was absorbed by the protocol and application layers.

The pattern seems clear: first-generation technologies establish proof of concept, while second-generation technologies reap market rewards.

However, 16 years after Bitcoin's inception, the situation is completely different.

Today, Bitcoin's market capitalization is approximately $1.8 trillion, accounting for over 58% of the entire crypto market. Ethereum, in second place, is worth about $300 billion, less than one-sixth of Bitcoin's. All the "Ethereum killers" and "Bitcoin alternatives" combined still don't reach half of Bitcoin's market capitalization. Sixteen years later, Bitcoin has not only not been replaced by its successors, but has actually widened the gap.

The difference lies in this: telegraphs, chips, and routers are tools ; their value lies in their functional efficiency , and their value becomes zero once their function is replaced . Bitcoin, however, is not a tool, but a protocol layer —a permissionless global consensus system.

The value of the protocol layer lies not in the speed of feature iteration, but in the cumulative effect of network effects, immutability, and the Lindy effect. TCP/IP will not be replaced by a "faster protocol" because the cost of replacement far outweighs the efficiency gains.

The logic behind Bitcoin is exactly the same.

II. Misunderstood Positioning – From Payment System to Global Settlement Layer

Bitcoin’s biggest narrative dilemma is that it is judged as a “payment system”—and then deemed a failure.

Slow transactions, high fees, low throughput. These criticisms are all true. But they criticize something Bitcoin never tried to be.

Payment and settlement are two different things.

You swipe your card at Starbucks, and it's done in two seconds. But is the money actually transferred? No. Visa only records a commitment; the actual transfer of funds waits for interbank clearing—which could happen that day or several days later. Visa processes tens of thousands of transactions per second, but it processes commitments, not settlements.

Settlement addresses another issue: Did this money truly and irreversibly move from A to B? The final settlement between global banks still relies on SWIFT and central banks—a system that takes days, requires permissions, and necessitates trusted intermediaries.

Bitcoin is not a competitor to Visa. It is a competitor to SWIFT—a permissionless global settlement layer.

This isn't theory. According to research data from Riot Platforms, the Bitcoin network settled over $19 trillion in transactions in 2024—more than double that of 2023, with a single-day peak exceeding $30 billion. Lightning Network, Ark, RGB—all these L2 protocols use the Bitcoin mainnet as the final settlement anchor. This is exactly what a settlement layer should be: the underlying layer doesn't prioritize speed, but rather irreversible finality.

From this perspective, Bitcoin's "shortcomings" are precisely its design: 10-minute block times, limited block size, and conservative script functionality—these are deliberate choices to ensure that anyone can run a full node, verify the entire history, and not rely on any centralized entity.

Inspiration from TCP/IP

In the 1970s, TCP/IP's performance metrics were quite "poor"—high latency, low bandwidth, and no native encryption. IBM's SNA and DEC's DECnet were technically more "advanced." But TCP/IP won. Not because it was faster, but because it was simple enough, open enough, and difficult enough to control.

Fifty years later, no one is trying to replace TCP/IP with a "faster protocol." It's not that there aren't faster solutions, but rather that the cost of replacement has become prohibitive.

This is a profound insight at the protocol level: once trust is established, efficiency is no longer the primary indicator; irreplaceability becomes the key factor.

Proof of human collaborative ability

In November 2025, Bitcoin Core completed its first independent security audit in 16 years, with the results showing zero high-risk vulnerabilities and zero medium-risk vulnerabilities.

Behind this figure lies an even more astonishing fact: a protocol supporting a market capitalization of nearly two trillion dollars has only 41 core developers worldwide, with annual funding of just $8.4 million. In contrast, Polkadot—with a market capitalization of less than 1% of Bitcoin's—spends $87 million annually on development.

We may have underestimated humanity's capacity for self-organization. Without companies, foundations, or CEOs, a group of developers distributed globally maintains the largest decentralized financial infrastructure in human history with extremely limited resources. This in itself is a testament to a new form of organization.

The underlying architecture is also evolving. v3 transactions, Package Relay, Ephemeral Anchors—these upgrades all share the same goal: to enable L2 to anchor more reliably to the main chain. This is not a mere stacking of features, but a structural improvement.

The grand strategy of the agreement: the last few pieces of the puzzle before petrochemicals

Adam Back—the inventor of Hashcash, a pioneer of Bitcoin's proof-of-work mechanism, and CEO of Blockstream—recently pointed out the direction for Bitcoin over the next decade: L1 should be conservative, minimized, and ultimately "petrified"—not by not upgrading, but by only making the last few most important upgrades.

Before we can proceed, we need to fill in a few key primitives: BitVM, Covenants, and Simplicity. These terms may not mean much to most people, but their common goal is clear: to make Bitcoin a strong enough "anchor layer" to then push all innovations to L2.

The roadmap is: minimum L1 → key primitives → innovation moving up → final petrification.

This is a large-scale strategic plan at the protocol level. It bears a striking resemblance to the evolution of TCP/IP: the core protocol remains stable, while complex functions are implemented at higher layers.

Bitcoin may appear weak in payments, but it's becoming increasingly strong in terms of its structure. This is by design, not a flaw.

III. Value Capture at the Protocol Layer – Bitcoin's Mother Currency Status

TCP/IP is one of the most successful protocols in human history, but it has a fatal flaw: the lack of a value capture mechanism .

The internet has created trillions of dollars in value, almost all of which has flowed to the application layer—Google, Amazon, Meta. TCP/IP itself is worthless. Vint Cerf and Bob Kahn transformed human civilization, but the protocol itself has not captured any economic returns.

This is a classic dilemma at the protocol layer: the more basic and open it is, the harder it is to charge fees.

Bitcoin broke this deadlock.

Financial native protocol layer

Bitcoin has been financially native from day one. Value transfer is inherently a function of the protocol; every transaction and every settlement directly involves the flow of BTC. The success of the protocol is directly tied to the value of the token.

TCP/IP doesn't have a "TCP coin." HTTP doesn't have an "HTTP coin." But Bitcoin has BTC.

When Bitcoin becomes a global settlement layer, BTC automatically becomes the unit of account for this settlement layer—in financial terms, the numeraire .

Observe the actual market behavior: the main trading pairs on exchanges are priced in BTC; when institutions allocate crypto assets, BTC is the benchmark, and others are "risk exposures relative to BTC"; the risk parameters of stablecoins, DeFi, and AI computing networks are ultimately tied to BTC. This is not a belief, but the market structure.

One more layer than gold, one more layer than TCP/IP

"Digital gold" is only half right.

Gold is a store of value, but not a protocol layer. You cannot build applications or run L2 networks on top of gold. Gold's value comes from its scarcity, but it does not generate network effects.

Bitcoin is both a store of value and a protocol layer. The Lightning Network, the RGB protocol, and various L2 protocols are all built on top of it, and their existence, in turn, reinforces Bitcoin's network effect. This is a compound growth logic that gold lacks.

Conversely, TCP/IP is a protocol layer but does not capture value. Bitcoin is both a protocol layer and captures value.

Therefore, Bitcoin's ultimate positioning is: the network effect of TCP/IP technology + the value storage attribute of gold + the inherent value capture capability of finance .

The three are combined, not replaced.

IV. Incremental Growth in the AI Era – Why the Context Has Changed

The above three layers of logic are all based on the deduction of the "existing" world. But the real variable is that we are entering a completely different era.

The internet connects people with data. AI connects algorithms, computing power, and autonomous agents.

This is not a change in degree, but a change in nature.

In the internet age, the main actors in the flow of value are humans—humans create content, consume services, and make decisions. The financial system is designed for humans; KYC, business hours, national borders, and manual approvals—these frictions are tolerable for humans.

In the AI era, the main actors in value flows will include a large number of non-human agents. There is a key structural constraint here: AI agents cannot utilize the existing financial system.

It's not "inconvenient," it's "impossible":

• AI agents cannot open bank accounts—they lack an ID card and cannot pass KYC.
• AI agents cannot wait for T+2 settlement—their decision-making cycle is in the milliseconds.
• The AI agent doesn't understand "weekdays"—it runs 24/7.
• AI agents cannot tolerate human approval—any human process is a bottleneck.

Every feature of the existing financial system is not a friction for the AI economy, but a fundamental obstacle.

The algorithmic economy needs algorithmic currency.

When AI agents begin to trade autonomously—purchasing computing power, making API calls, exchanging data, and settling services—they need a "mother coin"—a benchmark that all agents can recognize, trust, and use for pricing.

The US dollar is unsuitable for this role because it relies on human institutions as intermediaries. Ethereum is unsuitable for this role because its monetary policy can be changed through governance, and it has a clear leadership structure—Vitalik and the Ethereum Foundation—that can influence the protocol's direction.

BTC—with its fixed cap of 21 million, predictable issuance curve, rules that cannot be modified by any entity, and no founder, foundation, or CEO—possesses all the characteristics required of a "mother coin of the algorithmic era." Returning to the audited data: 41 developers, $8.4 million in annual funding, and zero high-risk vulnerabilities. This is not only a miracle of capital efficiency but also the ultimate proof of absolute decentralization and self-organized collaboration.

The AI era is not about making humans need Bitcoin more, but about making non-human intelligence need a global settlement layer for the first time.

This is why the economic scale of the AI era may far exceed that of the human internet era. The internet has 8 billion users. The participants in the AI economy could be billions of autonomous agents, conducting millions of micro-transactions per second.

Bitcoin is not competing for market share in a world of existing supply. It is laying the groundwork for a settlement layer in a new world that has not yet fully unfolded.

Conclusion: Final Valuation and the Return of Capital

To recap the logical chain of the entire article: Bitcoin is not the first generation of blockchain technology, but rather a protocol layer; it is undergoing architectural upgrades to become a truly reliable global settlement layer; as a financial native protocol, it naturally possesses the ability to capture value and is becoming the mother coin of the crypto world; and the arrival of the AI era will provide this mother coin with application scenarios far exceeding those of the Internet era.

If this logic holds true, then Bitcoin's valuation anchor is not just "digital gold."

The total market value of gold is approximately $18 trillion. The total value of the global internet economy is in the hundreds of trillions of dollars. The economic scale of the AI era will far exceed the sum of these two.

Bitcoin is the intersection of these layers of value. If it is merely "digital gold," then with a market capitalization of 18 trillion, each BTC would be worth approximately $850,000. However, if it simultaneously carries the network effects of the protocol layer and the settlement needs of the AI era, this figure is just the beginning.

Understanding this endgame logic allows us to understand the current market behavior.

A temporary departure of capital is not "giving up." If the long-term target for BTC is $1 million per coin, will smart money choose to start buying at $120,000, or wait for a pullback to $80,000 or $50,000 before entering the market?

Every panic sell-off is a transfer of chips from weak hands to strong hands. Every "Bitcoin is dead" narrative is just the market repricing itself at a lower level.

Bitcoin's mission is not over, but has just begun.