Ripple (XRP) co-founder Chris Larsen explains that the Tech Cold War is here and the US is not winning it
Chris Larsen, investor and co-founder of several Silicon Valley tech startups, including the most famous one, Ripple, believes the new US-China Cold War has already begun:
Image source: Twitter @chrislarsensf
The dollar dominance is coming to an end
In his article for The Hill, Mr. Larsen discusses the reasons that enable China to become a threat to America’s financial and technological dominance in the world.
88% of all financial transactions worldwide are now processed in the dollar. China, like the rest of the world, has benefited from the fact that the US supports and controls the global financial system, but now it has a chance to take the lead:
“Much of the world’s financial infrastructure is built on legacy technology from the 1970s and is facing dramatic changes from digital wallets, blockchain technology, cryptocurrencies, and interoperability protocols. For China, this is a golden opportunity to stave off Americans managing the global financial system, including its ultimate destination to replace the dollar with a digital yuan. ” Chris Larsen, co-founder of Ripple.
Chinese digitization is almost absolute
Digitization in China has reached unbelievable proportions. For example, the first state digital currency, Digital Yuan, is being developed while the Chinese themselves have almost completely abandoned cash and credit cards and are using digital payments.
Also, about 65% of the world’s cryptocurrency mining is concentrated in China, and the government subsidizes the energy needed for this process. Thus, the Chinese authorities already have a sufficient number of elements in hand to control the digital financial flows.
The US is way behind and should take some action
In contrast, in the US, success in digitizing the economy is not that important. Cash and credit cards still dominate today, and there are no initiatives to create a digital dollar that can compete with the Chinese currency. Additionally, only two blockchain protocols have been approved by regulators, but they are also under the control of Chinese miners.
Unfortunately, according to Larsen, US regulation is now too unfriendly to new technologies. It was launched after the ICO boom in 2017-2018 when many investors suffered from numerous cases of fraud. In recent years the legislation has not changed, it still does not define what “good” innovations are.
Chris Larsen believes that the development of the digital economy is a strategic interest for the United States and a national security issue, as it is already easy to imagine the future in which China can block payments from American companies or their allies and partners.
Therefore, it will be extremely important for the United States to pay more attention to digitization in order to prevent China from dictating new rules of the global financial system.