The Current Status and Challenges of Central Bank Digital Currency and Crypto Assets Industry

Recently, with the internal testing of certain banks' Central Bank Digital Money wallets, widespread attention has been drawn. Some Crypto Assets enthusiasts have shown great excitement about this, believing it will bring new opportunities to the industry. However, the relationship between Central Bank Digital Money and existing Crypto Assets is not as close as it seems.

The Central Bank Digital Currency is pegged to the Renminbi at a 1:1 ratio, with no speculation space, and cannot be directly exchanged for Bitcoin. Although it borrows some blockchain concepts at the technical level, such as using smart contracts for directed capital flow and asymmetric encryption for identity authentication, it is not fully based on blockchain underlying technology.

It is worth noting that some unscrupulous individuals may take advantage of the public's attention to Central Bank Digital Money to carry out fraudulent activities under its banner. Meanwhile, the traditional Crypto Assets market continues to experience competition among existing players, with new participants constantly entering, including traders, miners, trading platforms, and various blockchain projects.

In this resource-limited industry, the constantly evolving capital operation methods are causing a "tragedy of the commons." This economic theory indicates that limited resources are over-exploited due to free use and unlimited demand, ultimately harming the interests of all participants. Similar to the story of the pasture, overgrazing leads to the degradation of grasslands, causing losses for all herders.

This phenomenon is reflected in multiple aspects of the Crypto Assets industry:

1. The Dilemma of Trading Platforms: During the market downturn, trading platforms face declining revenues and intense competition. To attract users, they have launched various high-risk financial derivatives, such as high-leverage futures. While this has increased fee income in the short term, it has also intensified the risk of user losses, potentially leading to user attrition.

2. Compression of miners' profit margins: As the Bitcoin block reward is about to be halved and hash power continues to rise, miners are facing pressure from declining profits. Similar to the "tragedy of the commons", miners are constantly increasing their investment to compete for limited block rewards, but overall profits are shrinking.

3. Challenges of Public Chain Projects: A large number of public chain projects have emerged, but there are very few real applications. Traditional tech giants are also beginning to layout blockchain technology, causing the technical advantages of original public chain projects to gradually disappear. The public chain ecosystem, lacking application scenarios, is being replaced by enterprise-level blockchain solutions.

In the face of these challenges, the industry needs to find a breakthrough:

• The trading platform should strive to promote blockchain and Digital Money innovation, attracting more people to understand this field. At the same time, establish an industry self-regulation mechanism, standardize the promotion of financial products, and strengthen user education. Actively embrace regulation and promote compliant development, which helps attract traditional investment institutions to participate.

• Mining participants need to reach a consensus to avoid vicious competition. Explore new technological routes and business models, rather than simply expanding the profit cake through hard forks.

• Public chain projects should focus on real application scenarios, first verifying the feasibility of blockchain applications before investing in underlying technology development. Strengthen cooperation with external institutions and emphasize ecological construction. At the same time, increase efforts in talent cultivation and collaborate with universities to train professionals.

The Crypto Assets industry is still in the exploratory stage, and it is necessary to focus on sustainable development during the trial and error process. Only by addressing the current "tragedy of the commons" issue can the industry develop healthily and sustainably, ushering in a true dawn.