China's Central Bank Deputy Says Satoshi Nakamoto Deserves Respect

Lu Lei, deputy governor of the People's Bank of China, spotlights two influential figures in finance in his new book: Nobel laureate economist Robert Mundell and the mysterious Bitcoin creator, Satoshi Nakamoto.

According to Lu, both figures have revolutionized thinking around financial systems, though Bitcoin’s development has veered away from its initial purpose, evolving more as a store of value than as a daily currency.

Satoshi Nakamoto and Bitcoin In his book, Lu Lei explains that Nakamoto originally aimed to create a decentralized digital currency that could function as an everyday medium of exchange. Over time, however, Bitcoin has shifted primarily into a store of value, serving as an investment asset rather than a transactional currency. "Today, Bitcoin is more like an expensive digital asset, diverging from its intended role as a daily currency," writes Lu.

The book also highlights Bitcoin mining’s considerable energy demand. Lu points out that "the energy required to mine the remaining two million Bitcoin could cover the annual needs of hundreds of millions of people," emphasizing that Bitcoin’s current form is less efficient than Nakamoto’s original vision.

The New Challenge for Central Banks in the Digital Era Lu stresses that the rise of digital assets poses significant challenges to traditional financial systems and central banks. For central banks, embracing digital innovations and issuing digital currencies may be the way to keep state-backed currencies competitive. Lu argues that central banks should avoid a "forced self-preservation" approach, actively supporting new technologies while maintaining the stability of sovereign currencies.

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In his three-volume work, Theory of Money, Lu explores how digital transformation could establish new financial rules, reshaping traditional monetary policy and the role of central banks. He questions whether non-state digital assets will replace state currencies or if CBDCs will take the lead in the future financial landscape.

Bitcoin or Central Bank Digital Currencies? Lu Lei believes Bitcoin’s future role remains uncertain, especially given its high energy consumption and function as a store of value. Future financial systems are expected to balance digital innovation with financial stability.

For Bitcoin to fulfill its intended role as a daily currency, it must address current challenges, such as energy-intensive mining. Lu Lei suggests that one of the most significant questions for the future is whether Bitcoin can strike this balance, or if CBDCs will assume the leading role in modern finance.