China does not trust Bitcoin, but adores the Blockchain tech
Due to the Chinese government’s seemingly imminent intention of stopping the trade and exchange of Bitcoins and ICOs within their borders, the industry has suffered quite a lot of damage.
But why would China eliminate a potential opportunity to profit? What reason could they possibly have, especially when Chinese digital miners already dominate the global Bitcoin mining hub? Why do they seem so determined to get rid of the Bitcoin and ICO and so eager to proceed with Blockchain?
In order to further understand the subject matter, the following points are to be noted:
1. Compared to any other central bank in the world, the People’s Bank of China is considerably closer to being able to issue a digital fiat currency. It has actually been able to launch its own personal cryptocurrency research institute, with a leader who publicly addresses the potential of digital currency to the masses.
2. China has always had the ambition to dethrone the dominance of the US dollar, as is the desire of the Brazil, Russia, India, China, and South Africa, the international group labelled as BRICS. Putin, the president of Russia, publicly announced the group’s intention to cooperate in order to end the excessive domination of reserve currencies.
3. Albeit showcasing a general disdain and caution regarding Bitcoin and ICOs, China seems to have a certain fondness for distributed ledger technology. The Chinese government has expressed its intentions of further developing DLT, founding a new Blockchain lab a few days after the ban on Bitcoin trading.
4. The Chinese government has expressed its plan of implementing the “Belt and Road Project” which consists of establishing several trading routes that make the transportation of people and products easier and faster. In doing so, China is aiming to solidify its position as a global superpower, with undeniable control in infrastructure development and international trade.
Cutting the Middleman—America
From the points stated above, one thing becomes clear. China has the intention to steal the spotlight from the American government, ending the dependence of countries on the economic, financial, and political influence of the US.
With changes occurring in the American government due to differing interests of the newly elected president Donald Trump, there exists friction between America and its diplomatic allies. Where most people would worry and practice caution, China sees the opportunity of the situation and seizes it; aiming for global leadership.
Seeing the amount of money China has invested into blockchain technology, it seems quite evident that China intends to fully utilize the advantages of such technology in order to further advance its personal interests in dominating international trade. China is no longer hiding its intentions; it’s publicly working with Russia to integrate smart contacts, tokens, and other factors of blockchain technology into supply-chain management systems.
Last month, the launch of the Hong Kong-based Belt and Road Blockchain Program based on the worldwide “Belt and Road Project,” only solidifies the speculation that China intends to exploit blockchain technology to its fullest.
China has also been implementing countless upgrades to supply-chain logistics, making blockchain technology more efficient and easier to manage. An example of such upgrade is called the “E-Port network” which was made through the collective efforts of BRICS. The update was described as an innovative platform with the ability to oversee and process the international trades at a port level.
This technology could possibly be utilized with the intention of going against the interests of the American government, dethroning the dollar’s dominance. After all, it has already been publicly announced that Russia and China are working together in order to found security settlements based on the Blockchain.
It is not difficult to infer that these two global powers are exploring the novelty of blockchain technology, aiming to influence international trade on a large scale with the use of direct cross-currency exchanges.
Should China and Russia succeed, it could mark the fall of the dollar’s reign as the mediator between two traders with different currencies. It would cause severe losses to Wall Street, as it is no longer needed to serve as the middle bank, and destroy the triangulating system that gives the US the power over trades.
The US would experience immense financial losses; that much is not up to debate.
If this method of exchanging currencies would prove to be a successful experiment, it’s extremely likely that most countries would flock to this new, much more efficient method.
Thus, America doesn’t have the luxury of ignoring the imminent threat that China poses to its financial and political system. Should these advances be left to their devices and ignored, it’s probable that America would lose its dominance in the international trade, costing it the 70 years of hard work its predecessors spent in order to establish its current powerful position.
What happens to China?
With these unrelenting advancements in order to be able to influence the international trade, is China going to rise up and take the position of the US as the dominating force in the industry? That... would be too much of a stretch.
This is a statement one could make due to the limitations placed by the Chinese government. Surely one has heard of China’s banning of ICOs and Bitcoin. As both are members of a recently emerging currency system which encourages unrestricted innovations from its users, it’s possible that more people will flock to a system that encourages freedom rather than restriction.
However, that being said, China’s caution over Bitcoin and ICOs are understandable, given the sporadic nature of the trade. By cutting itself off from the industry, it is free from any potential opportunities and losses, which may or may not be a good decision depending on the direction ICOs and Bitcoin goes.
Should Bitcoin and ICOs bloom into further economic worth, China will be powerless to reap its advantages, and likewise, should these two prove to be a short-lived phenomenon, China will have the ability to walk away without any losses.
In the end, it’s just a gamble and a risky one at that.