On March 7, 2025, U.S. President Trump signed an executive order designating Bitcoin as a national strategic reserve asset. Behind this decision is Bitcoin’s transformation over 16 years from a geek toy to a multi-trillion-dollar asset, as well as the evolution of centralized exchanges (CEX) from their scrappy beginnings to becoming compliant industry giants. This article uses Bitcoin’s developmental history as its main narrative, offering an in-depth analysis of its evolution into a national strategic reserve asset and examining the key role that centralized exchanges have played in this process.

Bitcoin’s Birth and the Wild Growth of Early Exchanges (2008–2013)

  1. Satoshi Nakamoto’s Disruptive Experiment
    In 2008, amid the global financial crisis, the mysterious figure known as “Satoshi Nakamoto” published the Bitcoin whitepaper, proposing an electronic cash system that operates independently of centralized institutions. On January 3, 2009, the Bitcoin genesis block was created, embedding the headline from The Times: “Chancellor on brink of second bailout for banks,” directly criticizing the flaws of the traditional financial system.

    Key Data:

  • 2009 Bitcoin Price: $0 (no trading market)
  • 2010 First Transaction: 10,000 BTC exchanged for 2 pizzas (approximately $41)
  • June 2011 Peak: $31.9 (early speculative bubble)
Bitcoin’s Birth and the Wild Growth of Early Exchanges
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  1. Rise and Risks of Centralized Exchanges
    In July 2010, Japan’s Mt. Gox exchange went live and quickly became the world’s largest Bitcoin trading platform. By 2013, it accounted for 70%–80% of global Bitcoin trading volume, with a peak single-day trading value of about $100 million (estimated at $1,000/BTC during November’s peak). Meanwhile, the Chinese exchange market began to emerge – with JuCoin, founded in 2013, making its mark through localized operations and becoming one of China’s major platforms by 2015.

    However, security concerns soon emerged:

    • June 2011 Hacker Attack: An attack in June 2011 led to the theft of approximately 2,609 BTC (valued at about $80,000 at that time), causing the price to drop to $0.01 and halting trading for one week.
    • 2013 DDoS Attacks: Repeated DDoS attacks on exchanges led to downtime and inability for users to withdraw funds, sparking market panic.

    Exchange Landscape (2013):

  • Mt. Gox Market Share: 70%–80%
  • Other Major Platforms: Bitstamp (Europe), BTC China (China), JuCoin (China)

Global Daily Trading Volume: Approximately 100,000 BTC (roughly $50 million at an average price of $500)

  1. Lessons from the Early Market
    Centralized exchanges solved the liquidity problem for Bitcoin, yet their vulnerabilities became all too apparent: technical flaws, regulatory vacuums, and risks in user asset custody emerged as the industry’s three major pain points. Despite these issues, Bitcoin’s market cap surpassed $10 billion in November 2013, indicating the beginning of its recognition as a financial asset.

Period of Industry Pain: Exchange Crises and Regulatory Awakening (2014–2017)

  1. The Collapse of Mt. Gox: The Crumbling of Centralized Trust
    In February 2014, Mt. Gox announced the loss of 850,000 BTC (valued at $450 million at the time), accounting for 7% of the circulating supply. Post-investigation revealed that mismanagement of hot and cold wallets, internal theft, and long-unresolved code vulnerabilities were the main causes. This event led to an 80% drop in Bitcoin’s price and a reduction of global daily trading volume to less than 10,000 BTC.

    Chain Reactions:

    • Japanese police arrested Mt. Gox CEO Mark Karpelès.
    • New York introduced the BitLicense, requiring exchanges to meet AML and capital reserve standards.
    • The concept of decentralized exchanges (DEX) emerged, although hampered by technical bottlenecks (e.g., The DAO incident on Ethereum in 2016).

  2. The Wave of Compliance and Institutional Experimentation
    In 2015, Coinbase obtained New York’s first BitLicense and launched institutional custody services; in 2017, the Chicago Mercantile Exchange (CME) introduced Bitcoin futures, with a first-day trading volume of $460 million. During this period, two major trends emerged in the exchange space:

    • Geographical Differentiation: China’s three major exchanges (Huobi, OKEx, Binance) dominated the Asian market, and JuCoin’s rapid rise in 2015 made it one of Asia’s leading platforms with significantly increased daily trading volumes.
    • Technological Upgrades: Binance pioneered the “platform token” model (BNB), raising $15 million via ICO in July 2017; at the same time, JuCoin launched financial services and liquidity mining initiatives to explore ecosystem competition.

    Key Data (2017):

    • Bitcoin Market Cap Peak: $326 billion
    • Global Daily Trading Volume: 500,000 BTC (approximately $25 billion)
    • Coinbase User Base: Surpassed 10 million, with an estimated valuation of $1.6 billion

  3. The Fork Craze and Exchange Dominance
    In August 2017, due to disputes over scaling, Bitcoin forked into Bitcoin Cash (BCH), making exchanges the central battleground for pricing forked coins.

    • Exchanges such as Binance and Huobi were among the first to list BCH, with single-day gains exceeding 200%.

Breaking Through to Mainstream: Exchange Compliance and Financial Innovation (2018–2021)

  1. Exchanges’ Battle for Security
    Between 2018 and 2020, hacking incidents led to losses exceeding $3 billion across exchanges, forcing an industry-wide upgrade in risk management.

    • In 2019, Binance experienced a theft of 7,000 BTC and responded by launching the SAFU fund (using 10% of trading fee revenue as an insurance pool).
    • After Coinbase’s NASDAQ listing, it disclosed holding large amounts of BTC (exact figures were not public), with a valuation reaching $85 billion.
    • JuCoin’s strategy involved the adoption of multi-signature cold wallets and real-time on-chain asset audits.

    Custody Market Landscape (2021):

    • Professional custody providers: Coinbase Custody (with $50 billion in assets) and Grayscale Trust ($40 billion).
    • In-house custody by exchanges: Binance’s cold wallet reserves exceed several hundred thousand BTC, while JuCoin expanded into Web3 hardware (such as the JuOne phone) to enhance asset security.

  2. The Derivatives Market Explosion and Institutional Entry
    In 2020, CME’s Bitcoin futures open interest surpassed $4 billion, and companies like MicroStrategy and Tesla announced Bitcoin acquisitions for their balance sheets. Exchanges launched innovative products:

    • Binance Contracts: Offering up to 125x leverage, with peak daily trading volume reaching $37 billion.
    • JuCoin’s Contract Services: Introduced zero-slippage and zero-snipe insurance mechanisms with a KYC-free design that attracted global users.

    Market Cap and Trading Volume (November 2021):

    • Bitcoin Market Cap: $1.3 trillion (surpassing Meta and Tencent)
    • Global Daily Trading Volume: $80 billion in spot markets plus $200 billion in derivatives

  3. Regulatory Clampdowns and Industry Purges
    In 2021, China banned cryptocurrency trading entirely, leading exchanges like Huobi and OKEx to exit the mainland market; the SEC filed a lawsuit against Ripple, classifying XRP as a security. Compliance-driven exchanges accelerated their efforts:

    • Binance established regional headquarters (in Dubai and Paris), abandoning anonymous coins and delisting leveraged tokens.
    • JuCoin transformed in 2024 after an acquisition, rebranding as the “world’s first service-oriented exchange” with a focus on the Web3+AI sector and launching a $100 million industry innovation fund.

Strategic Reserve Assets: Bitcoin vs. the National Financial System (2022–2024)

  1. The Logic and Challenges of Trump’s Policy
    Trump’s push to designate Bitcoin as a U.S. strategic reserve is based on several factors:

    • Hedging Against the U.S. Credit Crisis: With U.S. national debt surpassing $35 trillion, Bitcoin’s capped supply of 21 million makes it an effective hedge against inflation.
    • Competing for Digital Supremacy: As China’s central bank digital currency (DC/EP) tests cross-border settlement, Bitcoin can serve as a complement to the dollar system.
    • Appealing to Younger Voters: Among American citizens aged 18–35, 25% hold cryptocurrencies (according to Pew Research Center).

    Implementation Challenges:

    • Legal Barriers: There is no unified federal definition yet on whether Bitcoin qualifies as “property.”
    • Market Volatility: Bitcoin’s annual volatility exceeds 60%, far surpassing that of gold (15%).
    • Custody Security: National reserves require trillion-dollar-level custody solutions, which current exchange technologies struggle to support.

  2. Restructuring the Role of Exchanges
    As Bitcoin becomes part of the national reserve system, centralized exchanges will evolve into:

    • Compliant Custodians: Institutions like Coinbase and Kraken, which have achieved bank-level security certifications (e.g., SOC 2), will provide on-chain audit services for the government.
    • Liquidity Market Makers: Platforms like Binance and JuCoin will handle central bank trading orders using high-frequency trading to smooth out price volatility.
    • Derivatives Hedging Platforms: CME’s Bitcoin options and ETFs will assist the Treasury in managing reserve risks.

    Potential Market Scale:

    • If the U.S. adds 1% of its foreign exchange reserves (approximately $40 billion) to Bitcoin, exchanges would need to purchase 400,000 BTC (about 3% of circulating supply).
    • Exchange commission revenues could increase by up to $2 billion annually (based on a 0.5% fee).
Reflection and Outlook
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Exchange Security Evolution: From Bybit Incident to Industry Standard Upgrades

  1. The Bybit Incident and Industry Reflection
    On February 21, 2025, Bybit experienced the largest cryptocurrency theft in history, with approximately $1.5 billion worth of ETH from its multi-signature cold wallet stolen due to a complex front-end interface attack.

    • JuCoin’s Response:
      • Launched an “Asset Proof” system to update on-chain reserve data frequently.
      • Upgraded its cold-hot wallet separation mechanism, ensuring 95% of user assets are stored in multi-signature cold wallets.

  2. Standardization Trend in Security Systems

    • Technological Advancements: Zero-knowledge proofs (ZKP) are being actively adopted by major exchanges (such as Binance and Kraken) to enhance reserve transparency while protecting user privacy by developing PoR systems based on ZKP.
    • AI-Driven Real-Time Security Monitoring: Artificial intelligence and machine learning technologies are increasingly used to detect abnormal trading and prevent threats in real time.
    • Stricter Regulatory Oversight: The EU’s MiCA regulations now require crypto asset service providers, including exchanges, to disclose detailed information on asset custody and security measures.
    • Enhanced U.S. Regulatory Focus: U.S. regulators are significantly ramping up their scrutiny of exchange security and actively exploring more comprehensive regulatory frameworks.
    • Industry Collaboration: Leading exchanges, such as JuCoin, are working with security firms to share threat intelligence and best practices, jointly advancing open-source security initiatives in the crypto space.

Reflection and Outlook: The Paradox and Evolution of Centralized Exchanges

  1. The Positive Impact of Exchange Failures
    Although past exchange crises have caused short-term pain, they have driven the industry toward healthier development:

    • Mt. Gox (2014) → Spurred the adoption of multi-signature wallets and cold storage standards.
    • FTX (2022) → Accelerated the implementation of 100% reserve proofs and on-chain asset transparency.
    • Bybit (2025) → Pushed exchanges to rapidly upgrade security protocols, including stricter multi-factor authentication, end-to-end transaction verification, and isolated signature infrastructure. Third-party services (such as Safe{Wallet}) now face more rigorous audits, with supply chain security becoming a focal point.

  2. Core Themes for the Next Decade

    • Technological Integration: Exchanges are integrating DEX liquidity (for example, JuCoin plans to launch a cross-chain DEX) to balance efficiency with decentralization.
    • Regulatory Cooperation: As the FATF “Travel Rule” takes effect, exchanges like JuCoin are adapting through their “Global Hub Program” to meet local compliance requirements.
    • Ecosystem Expansion: Hardware interfaces (such as the JuOne phone) and social features (like JuCoin Social) are reshaping user interaction scenarios.

  3. Re-defining Bitcoin’s Strategic Value
    As Bitcoin becomes a national reserve asset, it has proven its resilience as “digital gold”:

    • Censorship-Resistant Payments: During the Russia-Ukraine conflict, Bitcoin served as a cross-border donation channel, with daily on-chain transfers exceeding 100,000 transactions.
    • Asset Allocation Tool: Global sovereign funds and pension funds hold Bitcoin via platforms like Coinbase as a hedge against fiat depreciation.
    • Web3 Infrastructure: Exchanges are becoming gateways for the metaverse and NFT ecosystems, reshaping the issuance logic of digital assets.

The Final Stage of the Asymmetric Revolution

Bitcoin’s rise is a history of “the margins breaking through the center”: from dark web transactions to becoming legal tender in El Salvador, from the ruins of Mt. Gox to Coinbase’s public listing, centralized exchanges have always played the role of a “necessary evil” — introducing risk while accelerating adoption; they have been criticized repeatedly, yet evolved amid crises. If Bitcoin is truly incorporated as a national strategic reserve, it may well exemplify its “antifragility”: a protocol born from technological experimentation that could ultimately become the cornerstone for reshaping the global monetary order. Meanwhile, exchanges will continue to play the role of “paradoxical catalysts” in this revolution — both as dismantlers of the old system and as builders of a new order.

Neason Oliver

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