Bitcoin’s rise raises questions about its role in US-China competition

Of those numbers, 36 percent take place in Xinjiang, the province where the Uyghurs of the Muslim minority are exposed to what the US regards as genocide. Bitcoin mining is an energy-intensive process where networked computers check the cryptographic puzzle of the digital coin and earn a portion of the token’s value.

However, Bitcoin, a decentralized cryptocurrency, is said to thrive outside the control of any government, including Beijing.

“China is unlikely to support Bitcoin, especially now that it is” digitizing “its own currency,” said Dominic Meagher, director of Australia Strategy Group. “It goes against the ideology of the Chinese Communist Party. They will not support anything that they cannot control. “

Such wildcard technology could be seen as a threat to state power in the west or in China.

Perhaps because of this, the People’s Bank of China shut down bitcoin trading platforms in 2017, pressuring local governments, albeit somewhat unsuccessfully, to force miners to get out of business.

The Chinese government “doesn’t hate to hate Bitcoin” while the People’s Bank of China “loathes it,” says David Gerard, author of Libra Shrugged: How Facebook Tried to Take the Money.

“The only reason there is bitcoin mining in China is because it has some of the cheapest commercial electricity prices in the world,” he says.

An employee checks a bitcoin mining computer at the bitcoin mining company Landminers in southwest China’s Chongqing Municipality.Recognition:AP

That leaves the question of which political system, if any, will benefit from Bitcoin.

Carnegie says in a post-GFC world, people with cryptocurrency can “circumvent power structures that have been captured layer by layer of industry” – basically what feels like an inside game.

The recent surge in GameStop stock shows how connected groups of people, including communities disappointed with their economic experiences, have learned to use information in new and disruptive ways.

Before the recent price hike attracted more mainstream buyers, Bitcoin was the currency of choice for what Meagher referred to as “niche communities like tech enthusiasts, libertarians and criminals.”

Gerard believes the final group, which he describes as “offshore gamblers subject to regulatory investigation,” helped increase the value of Bitcoin. Technical managers also helped.

On February 8, Elon Musk’s electric car company Tesla announced it had bought $ 1.5 billion in the currency.

Mark Carnegie is preparing to return to Sydney this Easter before launching an unlisted crypto fund.

Mark Carnegie is preparing to return to Sydney this Easter before launching an unlisted crypto fund. Recognition:Ben Rushton

“I think Tesla, who buys bitcoins, has finally triggered the real bubble for retail real estate from the data,” says Gerard.

China’s government, meanwhile, is leading the world through the development of its privacy-evaporating national digital currency. The digital renminbi is centralized, state-controlled, and designed to fuel China’s economic influence, particularly through the Belt and Road countries.

As Bitcoin continues to generate investor interest as China begins testing a parallel and sovereign currency system, it may only be a matter of time before the disruptive power of crypto affects fiat currency.

Right now, Gerard says Bitcoin is “a bubble pumped by gross and obvious market manipulation, and bubbles always burst”.

“The only way to make money with Bitcoin is for someone to buy it from you for more than you paid for it.”

Carnegie, who himself switched to cryptocurrency late, plans to launch an unlisted cryptocurrency fund. He admits that bitcoin price movement is extreme, but says that “how crazy the crypto is just looking at the fiat money over the past 18 months”.

The world’s four major central banks have added $ 7.8 trillion ($ 10 trillion) to their balance sheets (which are effectively printing new money) since the pandemic began.

Whether or not Bitcoin turns out to be a bubble, the technology is likely to stay here, Carnegie says.

“It will change the world”.

Chris is a digital foreign editor.

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